These
briefing notes describe the situation as it exists at the
time of going to press

(mid October 2001)

They are
designed to help journalists and the public understand the
key issues of the Doha Ministerial Conference. While every
effort has been made to ensure the contents are accurate,
they are not legal interpretations of the WTO agreements,
nor do they prejudice member governments’ positions in the
conference and in future negotiations.

FURTHER INFORMATION
CAN BE FOUND IN VARIOUS WTO PUBLICATIONS,

INCLUDING:

10
Benefits of the WTO

10 Common Misunderstandings about the
WTO

The WTO in brief

Trading into the Future:
Introduction to the WTO. In booklet and interactive
electronic versions, obtainable from WTO publications,
downloadable from the WTO website http://www.wto.org

Guide
to the Uruguay Round Agreements. By the WTO Secretariat,
published jointly by the WTO and Kluwer Law
International

Focus magazine. The WTO’s electronic
newsletter, available on the website.

The WTO website:
http://www.wto.org

to see basic information about the WTO,
click on “THE WTO” in the top banner of most pages

During the course
of this Ministerial Conference, 142 governments will shape
the future of the global trading system in the 21st century.
It’s no exaggeration to say that what ministers decide here
in the next few days, will determine whether the World Trade
Organization remains at the centre of trade policy concerns
over the next few years.

Others have said that if the WTO
fails to embark on an ambitious work programme here in Doha
that the organization will be consigned to hibernation or
become irrelevant.

I don’t agree with that. We will still
be the most important global arbiter of commercial disputes
between nations, we will still provide technical assistance
and training to governments hungry to participate more
extensively in the global trading system and we will still
conduct the important Trade Policy Reviews.

But I believe
it’s true that the trade focus in many nations will shift
away from Geneva if we fall short of success in Doha. I’ve
said it many times because I believe it: trade
liberalization negotiations will take place next year, the
only question is whether they are conducted, bilaterally,
regionally or multilaterally.

Regional trade agreements
can make an important contribution to the global economy,
but they are no substitute for a multilateral system of
non-discriminatory trade rules. At a time when global
cooperation is as important as it has ever been, a failure
to improve one of the most important pillars of the
international architecture would be not only unfortunate but
dangerous.

Apart from the need to strengthen the system
and the organization, there is the obvious need to send
signals of confidence to a world in which the largest
economies all face the prospect of recession. The last time
that the European Union, Japan and the United States were
all in recession together was in 1975. The economic vitality
of these three members matters a great deal and not just to
those who live there. When the big economies contract it
means fewer exports from the developing world and less
foreign direct investment to poor countries. This will mean
fewer jobs in developing countries and lower prospects of
raising living standards.

Agreeing to launch an ambitious
work programme in Doha will not have immediate consequences
for the global economy. But it will send a very strong
signal that the WTO member governments are aware of the need
for action on issues that are of great importance to our
citizens.

Not all our member governments favour embarking
on an ambitious work programme and I have been criticized
for calling on members to begin a broad-based work programme
at Doha. I accept differences of view on this point, but
it’s important not to lose sight of the fact that on matters
of real substance, the only way to change the rules and
workings of the WTO is through negotiations. This is, after
all, a negotiating forum.

When developing countries say
they have not received all the benefits they expected from
the Uruguay Round and that the WTO should do better for
them, I agree. But does anyone seriously believe that we
will get substantive changes to our rules on agriculture,
textiles or trade remedies through any avenue other than
negotiations?

We need to face up to the fact that there
are things in our organization that could work better. Not
all our critics are wrong. This organization needs to do
more to assist poor countries through market access and
increased technical assistance. We need to do a better job
of assuring our peoples that WTO rules are not a threat to
the preservation of the environment. We need to work to
reduce imbalances in a global agricultural system which
results in rich countries spending roughly $1 billion a day
in subsidies which are often wasteful and trade distorting.
Reducing these subsidies and paring back the barriers to
imports from developing countries would result in benefits
to the developing countries equal to three times the level
of Official Development Assistance provided by rich
countries.

Moreover, we need to look at the way the
organization is run. As superb as the dispute settlement
system is, it has some problems which need to be addressed.
The banana dispute has highlighted the need to address how
and when a member government can retaliate against another
for failure to implement a ruling from the Dispute
Settlement Body. We need to examine ways in which developing
countries can participate more fully in the benefits of the
dispute settlement system.

We also need to serve our
member governments better through a system of technical
assistance that is adequately financed. Our current budget
covers only a fraction of our technical assistance costs and
the remainder must be made up through trust fund
contributions. I appreciate the generosity of those members
that have contributed to these trust funds. But without
adequate resources in the core budget, we cannot properly
plan our technical assistance activities beyond the current
year. We need to find ways of addressing the development
deficit through enhanced training and programmes which bring
those governments that cannot afford offices in Geneva more
into the fold.

Unless all members are fully engaged in the
process of negotiating and feel confident that they
comprehensively understand the issues, we run the risk of
creating new implementation problems in the future. Any
negotiations that are launched in Doha cannot be completed
if some members feel marginalized from the process and the
way to address this problem is through more and better
targeted technical assistance.

I have no illusions as to
the challenge ahead. Finding a satisfactory compromise on
issues like implementation, patentability of essential
medicines, agriculture, the environment, investment and
competition will not be easy to achieve. But find it we
must, because the price of failure is too high.

Mike Moore

WTO Director-General

BACKGROUND

The Doha ‘ministerial’: Culmination of a
two-year process

See also:

> The WTO website:
http://www.wto.org

To reach information on the
ministerial conference, follow:

… > the wto > ministerial
conferences (under decision-making)

or click on the
ministerial
homepage:

http://www.wto-ministerial.org

Preparation for
the Doha Ministerial Conference began in January 2000,
shortly after the unsuccessful 3rd Ministerial Conference
held in Seattle in December 1999.

Director-General Mike
Moore and 1999 General Council Chairman Ali Mchumo unveiled
for member governments a four point plan of confidence
building measures designed to get the organization back on
its feet and functioning again. The measures included:

- A
special mechanism for discussing and negotiating
implementation issues

- A comprehensive examination of
technical cooperation and capacity building activities

-
Procedures for ensuring more active and effective
participation of all member governments in the WTO

Each of
these four measures has proven successful. On the question
of the LDCs, 29 countries have committed themselves to
further opening their markets to exports from LDCs. The
General Council also agreed to establish an Implementation
Review Mechanism, through special sessions of the Council,
which has met regularly in formal and informal mode to
discuss and negotiate implementation issues. (See
implementation press brief, on page 19).

The
Director-General has led a comprehensive review of technical
cooperation and capacity building which, though still in
progress, has already resulted in greater efficiency.
Moreover, Mr. Moore has worked with heads of other
organizations to strengthen the Integrated Framework1 of
technical assis-tance for Least Developed Countries.

On
the question of more effective participation among member
governments, 2000 General Council Chairman Kare Bryn of
Norway and 2001 Chairman Stuart Harbinson of Hong Kong,
China have instituted a system of frequent open-ended and
informal heads of delegation meetings, complemented with
consultations in other formats. The objective of this sort
of system is to meet regularly to consult with and inform
all members of WTO activities across a broad spectrum of
consultations.

January 2000 also marked the launch of
mandated negotiations in the areas of agriculture and
serv-ices. These two-sectors of economic activity account
for roughly two thirds of global output and about the same
fraction of global employment. Negotiations in these sectors
have advanced well to this point with 121 member governments
submitting proposals in agriculture and 50 governments
submit-ting proposals in services. Although serious
bargaining aimed at securing concessions has not yet
started, many member governments have said they are pleased
with the progress to date.

As those negotiations
proceeded, members began preparing in early 2001 for the
WTO’s 4th Ministe-rial Conference. The organization is
mandated by the terms of the Marrakesh Agreement to hold its
conference every two years.

On 8 February 2001, the
General Council, which is the WTO’s day-to-day governing
body, agreed to accept an offer by the government of Qatar
to host the conference. The General Council Chairman and the
Director-General received from the Council, a mandate to
work with members on formulating organizational and
issue-related aspects of the preparation for the
meeting.

General Council Chairman Stuart Harbinson,
offered members a checklist on 20 April 2001of possi-ble
subjects for inclusion in the discussions. Member
governments accepted this checklist as the basis for future
work. Since April, the Chairman and the Director-General
have held hundreds of consulta-tions with delegations in a
variety of formats ranging from heads of delegation meetings
to one-on-one discussions. The approach has won praise from
member governments, particularly developing country members,
for its openness, transparency and efficiency.

Chairman
Harbinson and Director-General Moore have established a
“bottom-up” approach to the process by encouraging a
proponent driven system where those in favour of including
certain topics on the agenda would meet in an effort to
raise support for their positions. WTO member governments
held a series of meetings outside the formal General Council
process to test levels of support on a range of issues which
included non-agricultural market access, investment,
competition, environment, fisheries subsidies and reform of
the Dispute Settlement Understanding.

These sessions
served as a method of producing inputs to Chairman
Harbinson’s process.

During the first half of 2001,
Director-General Moore met regularly with trade ministers
and urged them to work more intensively to bridge
differences between positions. He stressed to them the
im-portance of avoiding a failure at Doha.

On 24 July
2001, Chairman Harbinson and Director-General Moore released
a report on the state of play regarding the negotiations.
This report, which the Director-General referred to as a
“reality check” offered a sobering assessment of the
situation as it stood then. The General Council met on 30-31
July and debated the way to move beyond what virtually all
members considered to be an impasse. In speaking to the
General Council, Mr. Moore warned that “the situation is
fragile, and without gen-erosity, good manners and good
will, the process could implode and become unmanageable.
Unless the reality we now see is taken to heart and acted
upon, the passage of time will change the reality for the
worse, and the process could become unmanageable.”

At the
end of July meeting there was a general acknowledgement that
progress on the implementation issue was essential to moving
the process forward. Chairman Harbinson told member
governments that it was essential to use the August break to
examine positions and to prepare for intensive
consul-tations during the stretch run to Doha.

Returning
to work on 4 September, the General Council heard from
Chairman Harbinson that delega-tions could not expect
Ministers to arrive in Doha with all issues still
unresolved. The strategy of leaving all issues to be settled
by Ministers had failed at Seattle, he said, and could not
be expected to work in Doha.

Throughout September,
Chairman Harbinson held intensive consultations with
delegations in a wide array of formats, in a bid to uncover
bottom-line or at least more compatible positions.

On 26
September the Chairman and the Director-General released to
members two documents, one a draft Ministerial Declaration
and the other a draft decision on implementation related
issues and con-cerns. The Chairman stressed that no portion
of either text was agreed and that no element of either
could be considered agreed until all elements were agreed.
The texts represented the best judgement of the two men on
“what the market could bear” in terms of an outline for a
future work programme.

In parallel with Chairman
Harbinson’s efforts, the Director-General maintained close
contact with Ministers. During the last several months, the
Director-General has met face to face with more than 100
Ministers whom he encouraged to show the necessary
flexibility to ensure that the Ministerial Conference would
be completed successfully.

Throughout October, Chairman
Harbinson held informal open-ended heads of delegation
meetings on implementation issues and the issues contained
in the draft Ministerial Declaration. Members ac-cepted both
documents as the basis for negotiation, while stressing that
there were elements in each document to which they were less
than favourably inclined.

The process succeeded in
narrowing differences, but ultimately differences between
members gov-ernments have remained. On certain key issues,
it is clear that resolution can only come at the
Minis-terial Conference itself.

ENDS

LEAST-DEVELOPED COUNTRIES (LDCS)

Towards free market
access for least-developed countries

In the last few years
WTO members have concentrated a lot of efforts into
improving the condition of least-developed countries (LDCs)
inside the multilateral trading system, both in terms of
market ac-cess and technical assistance. Measures taken in
the framework of the WTO can help LDCs increase their
exports to other WTO members and attract investment.

In
many developing countries, pro-market reforms have
encouraged faster growth, diversification of exports, and
more effective participation in the multilateral trading
system. Excluding countries at war or in transition, export
growth in developing countries has risen from 4.3% a year in
the 1980s to 6.4% in the 1990s. Growth in GDP per person has
risen from 0.4% year to 1.5% per year.

Even the
least-developed countries are doing slightly better, though
not as well as other developing countries. Again, excluding
countries at war or in transition, export growth in LDCs has
risen from 2.9% a year in the 1980s to 3.2% in the 1990s.
And whereas GDP per person fell by 0.6% a year in the 1980s,
it rose by 0.8% a year in the 1990s.

Specifically, the
WTO has “delivered” for LDCs in the following
areas:

First, there have been significant improvements in
market access opportunities for LDCs. Twenty eight WTO
members have pledged market access improvements. Many of
them have actually agreed to drop all barriers and provide
“duty-free and quota-free” treatment to all LDC exports.
They join a number of other countries who already provide
open markets. The average non-weighted tariff ap-plied by
major trading partners to LDCs exports has fallen from 10.6%
in 1997 to 6.9% in the first quarter of 2001.

For
example:

- Canada, effective 1 September 2000, added a
further 570 tariff lines to the list of goods from LDCs
eligible for duty-free treatment. About 90% of all LDC
imports will now receive duty-free treatment;

- New
Zealand, since 1 July 2001, offers duty-free and quota-free
access to all imports from LDCs

- The European Union,
Norway and Switzerland provide duty-free, quota-free market
access for all LDC exports (except arms). A transition
period is in place for a few specific products.

- Japan
in December 2000, announced its “99%-initiative on
Industrial Tariffs”. Following imple-mentation, in April
2001, the coverage of duty and quota-free treatment for LDCs
industrial prod-uct exports increased from 94 to 99% and
includes textile and clothing exported from LDCs;

- The
US has further elaborated on the African Growth and
Opportunity Act (AGOA) adopted in May 2000. Thirty four
Sub-Saharan countries have been designated as beneficiaries
under AGOA in October 2000, who can avail new GSP benefits
from 1835 tariff lines as from December 2000.

- Hungary,
the Czech Republic and the Slovak Republic provide duty free
and quota free access to all imports from LDCs.

Second, the Integrated Framework (IF) — the joint
IMF, ITC, UNCTAD, UNDP, World Bank and WTO technical
assistance program for LDCs — has been redesigned and is in
operation on a Pilot Basis in Cambodia, Madagascar and
Mauritania. It will help LDCs mainstream trade into their
na-tional development plans and strategies for poverty
reduction. It will help ensure trade, as an engine for
growth, is central to development plans. It will also ensure
that trade-related technical assistance and capacity
building is delivered within a coherent policy framework
rather than on a stand-alone basis. The possibility of the
extension of the IF Pilot Scheme is being examined, based on
progress reported at the Fourth WTO Ministerial Conference.

The agencies have set up a Trust Fund for the Integrated
Framework to which several donor countries contributed in
total $6.2 million.

The first-ever joint seminar of the
six agencies of the Integrated Framework was held in January
2001. It demonstrated the rationale and techniques for
mainstreaming trade into LDCs’ development plans and poverty
reduction strategy papers and showed how the re-designed
Integrated Framework can operate as a mechanism for poverty
reduction and delivery of trade-related technical
assistance.

Technical assistance to enable LDCs implement
their rights and obligations under WTO Agreements is also
being provided. For instance, under the Joint Initiative on
Technical Cooperation for LDCs by WIPO and WTO, assistance
is being offered to make best use of the intellectual
property system of these countries.

Third, WTO members
are currently looking at means to assist as much as possible
those LDCs in the process of joining the WTO. LDCs acceding
to the WTO have to learn and to understand how the WTO
works. They need to draft domestic laws that comply with WTO
rules. They need to establish mechanisms for enforcing those
rules. And they need to negotiate with existing members
suitable conditions of entry to the WTO. LDCs currently in
the process of accession to the WTO are: Bhutan, Cambodia,
Cape Verde, Lao People’s Democratic Republic, Nepal, Samoa,
Sudan, Vanuatu and Yemen. In addition, Ethiopia and Sao Tome
& Principe are WTO observers.

Fourth, WTO members have
taken a host of initiatives to help LDCs participate more
fully at the WTO. These include:

- activities for
non-resident members and Observers to ensure that those
countries not represented in Geneva can still follow the
daily business of the WTO and still be an integral part of
the WTO process;

- the “Geneva Week”: an annual event
bringing together senior officials from capitals and
Euro-pean-based missions — not only of LDCs but also of
other small economies — to learn and ex-change views
concerning critical areas of the WTO work;

- improvement
of the WTO’s Trade Policy Review Mechanism: as well as
shedding light on a country’s trade rules, it now helps
trade policy capacity building and the mainstreaming of
trade priorities into national development plans and poverty
reduction strategies;

Fifth, and finally, the WTO provides a forum
where LDCs can and do raise particular problems relat-ing to
food safety and quality standards. Indeed, LDCs can find it
difficult to comply in their exports with developed
countries’ sanitary standards. WTO agreements limit
importing countries’ scope to impose arbitrary requirements
on LDCs’ exports, and encourage the use of internationally
developed standards. The Director-General himself has
initiated high-level discussions with the secretariats of
international standard-setting bodies to improve LDCs’
participation and capacity to make full use of international
standards.

LDCs in the WTO

The WTO recognizes as
least-developed countries (LDCs) those countries which have
been desig-nated as such by the United Nations. There are
currently 49 least-developed countries on the UN list, 30 of
which to date have become WTO members.

Nine additional
least-developed countries are in the process of accession to
the WTO. They are: Bhu-tan; Cambodia; Cape Verde; Laos;
Nepal; Samoa; Sudan; Vanuatu and Yemen.

Furthermore,
Ethiopia and Sao Tome & Principe are WTO Observers.

ENDS

AGRICULTURE

Current negotiations,
implementation, and Doha

See also:

> An outline of the
WTO’s Agriculture Agreement in the section on agriculture in
“Trading into the Future” (pages 17–19 in the printed
version, or go to
http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm3_e.htm
on the WTO website).

> Detailed information on agriculture
in the WTO can be found at
http://www.wto.org/english/tratop_e/agric_e/agric_e.htm and
on the agriculture negotiations (including all current
proposals) at
http://www.wto.org/english/tratop_e/agric_e/negoti_e.htm

Introduction

Up
to 1995, GATT rules were largely ineffective in disciplining
agricultural trade. In particular, ex-port subsidies came to
dominate many areas of world agricultural trade, while the
disciplines on im-port restrictions were often
flouted.

The 1986–1994 Uruguay Round went a long way
towards changing all that. Agricultural trade is now firmly
within the multilateral trading system. The Agriculture
Agreement, together with individual countries’ commitments
to reduce export subsidies, domestic support and import
barriers on agricul-tural products were a significant first
step towards reforming agricultural trade.

The reform
brought all agricultural products (as listed in the
agreement) under multilateral disciplines, including “tariff
bindings” — WTO members have bound themselves to maximum
tariffs on virtually all agricultural products, while a
significant number of industrial tariffs remain
unbound.

Current negotiations: second phase began in March
2002

> See “WTO Agriculture negotiations: the issues, and
where we are now” for explanations and details of the
issues, proposals and discussions. This can also be browsed
or downloaded from the agriculture negotiations pages of the
WTO website at
http://www.wto.org/english/tratop_e/agric_e/negoti_e.htm

The
negotiations are now in their second phase. The first phase
began in early 2000 and ended with a stock-taking meeting on
26–27 March 2001. Altogether, 126 member governments (89% of
the 142 members) submitted 45 proposals and three technical
documents. Six negotiating meetings (officially called
“Special Sessions” of the Agriculture Committee) were held:
in March, June, September and November 2000, and February
and March 2001.

In the second phase, the meetings are
largely “informal”, with a record of proceedings taking the
form of a summary report by the chairperson to formal
meetings (i.e formal “Special Sessions”). The work programme
decided at the March 2001 stock-taking meeting set a
timetable of six informal meetings in May, July, September
and December 2001, and February and March 2002. The
September and De-cember 2001 and March 2002 sessions are
also followed by formal meetings.

The first phase
consisted of countries submitting proposals containing their
starting positions for the negotiations. The meetings
discussed each of these proposal in turn. In the second
phase, the discus-sions are by topic, and include more
technical details, which is needed in order to find a way to
allow members to develop specific proposals and ultimately
reach a consensus agreement on changes to rules and
commitments in agriculture.

>
Details in the Agriculture Committee vice chairman’s report
to the General Council, document G/AG/11, 28 September 2001,
available at:
http://www.wto.org/english/tratop_e/agric_e/implementation2001_e.htm

On
27 September 2001, the Agriculture Committee reached a
decision on three issues of implementa-tion — developing
countries’ concerns about implementing the current WTO
agreements (see also page 19).

- Export credits, export
credit guarantees or insurance programmes (which come under
provi-sions dealing with the circumvention of agricultural
export subsidy commitments): The commit-tee agreed on future
work both in its regular meetings and its special
negotiating sessions, and to report to the General Council
in late 2002. If OECD members reach agreement on
agricultural ex-port credits, the committee will also
consider how this might be brought into the WTO.

-
Improving the effectiveness of the implementation of the
ministerial decision on the possible negative effects of the
reform programme on least-developed and net-food-importing
devel-oping countries: the decision covers food aid,
technical and financial assistance, financing nor-mal levels
of commercial imports of basic foodstuffs (including, “an
inter-agency panel of finan-cial and commodity experts be
established […] to explore ways and means for improving
access by least-developed and WTO net food-importing
developing countries to multilateral programs and facilities
to assist with short term difficulties in financing normal
levels of commercial im-ports of basic foodstuffs, as well
as the concept and feasibility of the proposal for the
establish-ment of a revolving fund”); and review and follow
up in late 2002.

- Tariff quotas to be administered
transparently, equitably and without discrimination: A
number of developed countries have supplied additional
information on their tariff quota admini-stration as part of
increasing transparency following a decision by the WTO
General Council. The Agriculture Committee noted that the
General Council has also said this should not place undue
new burdens on developing countries, and it agreed to keep
the issue under review.

The Ministerial
Declaration

Article 20 of the Agriculture Agreement
requires WTO members to negotiate to continue the reform,
starting in 2000. Some countries argue that if these
negotiations are to be built into broader talks cov-ering
other subjects, then in return WTO members should agree on
more ambitious targets for the ag-riculture negotiations.
This is proving to be one of the more difficult areas in the
preparations for the Ministerial Conference.

The draft
ministerial declaration circulated at the end of September
2001 lists seven topics and says there will be further
consultations on what the declaration should say on these:
the current negotia-tions and the active participation of
developing countries; the long-term objective of reform in
agri-culture; the direction or aims of reform in market
access, domestic support and export competition; special and
differential treatment for developing countries; non-trade
concerns; the schedule for the rest of the negotiation
(currently there is no timetable); which body should handle
the agriculture ne-gotiations.

ENDS

SANITARY AND
PHYTOSANITARY (SPS) MEASURES

Food safety, etc

This
briefing document focuses on the SPS issues raised in the
lead-up to the Doha Ministerial Conference.

> An outline
of member countries’ obligations under the WTO’s SPS
Agreement can be found in the section on agriculture in
“Trading into the Future” (page 19 in the printed version,
or go to
http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm3_e.htm
on the WTO website).

> More details can be found in the
WTO booklet on the SPS Agreement or on the WTO website at
http://www.wto.org/english/tratop_e/sps_e/spsund_e.htm and
http://www.wto.org/english/tratop_e/sps_e/sps_e.htm

Sanitary
and phytosanitary measures deal with food safety and animal
and plant health standards. The WTO does not set the
standards. The WTO’s SPS Agreement encourages member
countries to use standards set by international
organizations (see box), but it also allows countries to set
their own standards.

These standards can be higher than
the internationally agreed ones, but the agreement says they
should be based on scientific evidence, should not
discriminate between countries, and should not be a
disguised restriction to trade.

The provisions strike a
balance between two equally important objectives: helping
governments protect consumers, and animal and plant health
against known dangers and potential hazards; and avoiding
the use of health and safety regulations as protectionism in
disguise.

The following issues are among those raised in
the lead up to the 2001 ministerial conference in Doha. Most
were first raised in the preparations for the Seattle
ministerial conference in 1999. They come under the heading
of “implementation [of the existing Uruguay Round
agreements]” (see also page 19). At the time of writing, it
is uncertain whether these issues will lead to negotiations
to amend the SPS Agreement itself. So far, no country has
formally asked to reopen the agreement. Some countries have
said some issues in the agreement need to be clarified. This
could be dealt with, for instance by decisions or
declarations from the Ministerial Conference or General
Council.

Equivalence

SPS measures reduce risks to
consumers, animals or plants to acceptable levels. Different
measures could be equivalent in providing the same level of
health protection against risks of disease or
con-tamination. Article 4 of the SPS Agreement requires
governments — under certain conditions — to recognize other
governments’ equivalent measures. The main question is how
to establish that an ex-porting country’s measures are
equivalent to those used in the importing country.

In the
WTO, developing countries in particular say developed
countries are not doing enough to ac-cept that actions they
are taking on exported products — in particular inspection
and certification pro-cedures — are equivalent to the
importing developed countries’ requirements even when the
measures are different, because the measures provide the
same level of health protection. In October 2000, the
General Council assigned the SPS Committee to examine these
developing-country concerns.

Among the points raised in
the committee since then are:

- Different ways of
achieving the level of protection required by the importing
country: using the same measure; accepting that different
individual measures applied to individual products can be
equivalent; or accepting that different systems (such as
national control systems) are equivalent.

- Whether
formal equivalence agreements (such as recognizing each
others’ veterinary measures) are necessary — some members
have argued that these are not necessary and could be too
com-plicated to negotiate.

- The need for transparency
and information —members said they would inform each other
through the WTO when they recognize that other members’
measures have equivalent results.

- How to determine and
compare the “appropriate level of protection” against a
hazard or risk of a hazard such as disease. Members have
discussed the need for the importing country to provide a
clear description of the level of protection.

Members have
been discussing a draft decision on implementing Article 4,
i.e. equivalence.

Voluntary commitments and reasonable
time periods

A number of members, developing countries in
particular, say the agreement is too vague on some points.
They want to see this tightened through a ministerial
declaration or some other means. They would also like some
voluntary commitments turned into mandatory ones.

Two
issues are the advance warning governments should provide
when they draft new regulations, and the time developing
countries should be allowed to adapt their exports to
developed countries’ new standards. The SPS Agreement uses
phrases such as “a reasonable” period of time. Some
coun-tries want this to be clarified — specifying six months
or a year, for example.

Several countries want the whole
of Article 10, which deals with special and differential
treatment for developing countries, to be mandatory.

Some
countries see the clarification as part of improving the
implementation of the SPS Agreement. Others say it involves
interpreting or modifying the agreement and therefore it
should be included in the new negotiations.

Other
developing-country concerns

In addition to seeking
clarification on the above issues, a number of developing
countries have ex-pressed concern about their lack of
resources for implementing the agreement. Among the burdens
are:

- developing countries’ difficulty in participating
effectively in drafting and agreeing the rele-vant
international standards.

- monitoring new regulations in
their export markets

- the difficulty of demonstrating
sufficient scientific evidence to justify their own measures
or challenge those of others

These countries are calling
for both technical assistance, and more time to
comply.

Risk and precaution

The recent debate
surrounding some food safety and animal health issues —
including disputes in the WTO over the use of hormones in
beef production and over regulations for salmon — raises the
question of whether the SPS Agreement’s preference for
scientific evidence goes far enough in dealing with possible
risks for consumers and producers.

A phrase that has
emerged in the debate is the “precautionary principle”, a
kind of “safety first” approach to deal with scientific
uncertainty. To some extent, Article 5.7 of the SPS
Agreement addresses this, but some governments have said
outside the WTO that they would like the principle
strengthened. The “precautionary principle” has been
discussed in the SPS Committee, but there have been no
proposals so far for altering existing agreements. It has
also been raised by the EU, Japan, Switzerland and some
other countries in the current agriculture
negotiations.

Genetically modified organisms and
biotechnology

These issues possibly span several WTO
agreements, including SPS, Agriculture, Intellectual
Prop-erty (TRIPS) and Technical Barriers to Trade (TBT).
They have also been discussed in the Trade and Environment
Committee.

Although member governments have notified a
large number of regulations related to GMOs to the SPS
Committee, most of the discussion on the subject has been in
the TBT Committee with the focus on labelling
regulations.

In the current agriculture negotiations, some
members have called for clarity in the WTO rules as ap-plied
to products of new technologies.

ENDS

TRADE IN
SERVICES

The work programme and the current
negotiations

> An outline of the WTO’s General Agreement
on Trade in Services (GATS) can be found in the section on
services in “Trading into the Future” (page 21 in the
printed version, or go to
http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm5_e.htm
on the WTO website).

> For more details on services trade
in the WTO follow the path …> trade topics > services on the
WTO website or go directly to
http://www.wto.org/english/tratop_e/serv_e/serv_e.htm. For
the services negotiations, follow …> trade topics > services
and look for “work in the WTO” or go directly to
http://www.wto.org/english/tratop_e/serv_e/s_negs_e.htm

Contents

Overview
of current work 14

Explanation of GATS 16

OVERVIEW OF
CURRENT WORK

The WTO’s General Agreement on Trade in
Services (GATS) contains separate mandates for a heavy work
programme covering a wide range of subjects. Work on some of
the subjects started in 1995, as mandated, soon after the
GATS came into force in January 1995. Work on other
subjects, including the negotiations to further liberalize
international trade in services, started in 2000, also as
mandated. All these subjects come under the current work
programme, some of which involves negotiations and some
calls for study and review. As yet, no deadlines have been
set for conclusion of work on any of these subjects — with
one exception: the negotiations on safeguards (see below
GATS rules).

Negotiations to further liberalize trade in
services (Articles XIX and IV.3)

Negotiations to further
liberalize international trade in services started in early
2000 as mandated by the GATS (Article XIX). Now in their
second year, the negotiations are continuing actively with
the full commitment by all members.

The first phase of
the negotiations concluded successfully in March 2001 when
members agreed on the guidelines and procedures for the
negotiations. Agreement on the guidelines marks the
fulfilment of a key element in the negotiating mandate as
laid down in the GATS. By agreeing these guidelines, members
have not only set the objectives, scope and method for the
negotiations in a clear and bal-anced manner, but also
unequivocally endorsed some of the fundamental principles of
the GATS — i.e. members’ right to regulate and to introduce
new regulations on the supply of services in pursuit of
national policy objectives; their right to specify which
services they wish to open to foreign suppliers and under
which conditions; and the overarching principle of
flexibility for developing and least-developed countries.
The guidelines, therefore, reflect great sensitivity towards
the public policy con-cerns in relation to important sectors
such as health-care, public education and cultural
industries, while stressing the importance of achieving
higher levels of liberalization and ensuring effective
mar-ket access.

Since March 2001, the negotiations have
moved into a more intensive phase of discussing specific
proposals. So far, around 100 proposals have been submitted
by 50 members covering a wide range of services sectors, the
movement of natural persons and other issues such as the
treatment of small and medium-sized enterprises,
transparency of regulations, classification issues and MFN
exemptions. members have agreed to review progress in March
2002.

Work on GATS rules (Articles X, XIII, and
XV)

Negotiations started in 1995 and are continuing on the
development of possible disciplines that are not yet
included in the GATS: rules on emergency safeguard measures,
government procurement and subsidies. Work so far has
concentrated on safeguards, where members have agreed to
conclude the negotiations by March 2002. But the results
will come into effect at the same time as the results of the
current services negotiations — for which no deadline has
been fixed as yet. Rules on safeguards will define the
procedures and disciplines under which a member can
introduce temporary measures to limit market access in
situations of market disruptions.

Work on domestic
regulations (Article VI.4)

Work started in 1995 to
establish disciplines on domestic regulations — i.e. the
requirements foreign service suppliers have to meet in order
to operate in a market. The focus is on qualification
require-ments and procedures, technical standards and
licensing requirements. By December 1998, members had agreed
disciplines on domestic regulations for the accountancy
sector. Since then, members have been engaged in developing
general disciplines for all professional services and, where
necessary, additional sectoral disciplines. All the agreed
disciplines will be integrated into the GATS and become
legally binding by the end of the current services
negotiations.

Work on this subject
started in 2000. When GATS came into force in 1995, members
were allowed a once-only opportunity to take an exemption
from the MFN principle of non-discrimination between a
member’s trading partner. The measure for which the
exemption was taken is described in a mem-ber’s MFN
exemption list, indicating to which member the more
favourable treatment applies, and specifying its duration.
In principle, these exemptions should not last for more than
ten years. As mandated by the GATS, all these exemptions are
currently being reviewed to examine whether the conditions
which created the need for these exemptions in the first
place still exist. And in any case, they are part of the
current services negotiations.

Treatment of autonomous
liberalization (Article XIX)

The negotiating guidelines
and procedures agreed by members in March 2001 (see above)
also stated that, based on multilaterally-agreed criteria,
account shall be taken and credit shall be given in the
ne-gotiations for autonomous liberalization undertaken by
members since previous negotiations and that members shall
endeavour to develop such criteria prior to the start of
negotiations on specific com-mitments. Members are
continuing their discussions on various issues including the
relationship be-tween credit and binding of commitments, how
to assess the value of the liberalization measures and hence
of the credit to be granted, and multilateral versus
bilateral treatment of autonomous
liberaliza-tion.

Assessment of trade in services (Article
XIX)

Preparatory work on this subject started in early
1999. The GATS mandates that members conduct an assessment
of trade in services with reference to the objectives of the
agreement, including those re-lated to increasing the
participation of developing countries in services trade. The
negotiating guide-lines also restate this mandate, make this
a standing item on the members’ agenda, and state that the
negotiations shall be adjusted in the light of the results
of the assessment. Members have generally acknowledged that
the dearth of statistical information and other
methodological problems make it impossible to conduct an
empirical assessment of trade in services. However, they are
continuing their discussions with the assistance of several
papers produced by the Secretariat.

Review of air
transport services (Annex on Air Transport Services)

At
present, most of the air transport sector — traffic rights
and services directly related to traffic rights — is
excluded from the coverage of the GATS. However, the GATS
mandates a review by members of this situation. The purpose
of the review, which started in early 2000, is to decide
whether additional air transport services should be covered
by the GATS. The review could develop into a negotiation in
its own right, resulting in an amendment of the GATS itself
by adding new serv-ices to its coverage and by adding
specific commitments on these new services to national
schedules.

EXPLANATION OF GATS

The GATS is the first
ever agreement of multilateral, legally-enforceable rules
covering international trade in services. It was negotiated
in the Uruguay Round. GATS has three elements: the main text
containing general obligations and disciplines; annexes
dealing with rules for specific sectors; and individual
countries’ specific commitments to provide access to their
markets, including indications of where countries are
temporarily not applying the “most-favoured-nation”
principle of non-discrimination. These commitments — like
tariff schedules for trade in goods — are an integral part
of the agreement. So are the temporary withdrawals of
most-favoured-nation treatment.

General obligations and
disciplines

Total coverage

The agreement covers all
internationally-traded services — for example, banking,
telecommunica-tions, tourism, professional services, etc.
The agreement also defines four ways of trading
services:

- services supplied from one country to another
(e.g. international telephone calls), officially known as
“cross-border supply”

- consumers or firms making use of
a service in another country (e.g. tourism), officially
known as “consumption abroad”

- a foreign company
setting up subsidiaries or branches to provide services in
another country (e.g. foreign banks setting up operations in
a country), officially “commercial presence”

-
individuals travelling from their own country to supply
services in another (e.g. fashion models or consultants),
officially “presence of natural persons”

Most-favoured-nation (MFN) treatment

Favour one, favour
all. MFN means treating one’s trading partners equally on
the principle of non-discrimination. Under GATS, if a
country allows foreign competition in a sector, equal
opportunities in that sector should be given to service
providers from all other WTO members. (This applies even if
the country has made no specific commitment to provide
foreign companies access to its markets un-der the
WTO.)

MFN applies to all services, but some special
temporary exemptions have been allowed. When GATS came into
force, a number of countries already had preferential
agreements in services that they had signed with trading
partners, either bilaterally or in small groups. WTO members
felt it was necessary to maintain these preferences
temporarily. They gave themselves the right to continue
giving more favourable treatment to particular countries in
particular services activities by listing “MFN exemp-tions”
alongside their first sets of commitments. In order to
protect the general MFN principle, the exemptions could only
be made once; nothing can be added to the lists. They are
currently being re-viewed as mandated, and will normally
last no more than ten years.

Commitments on market access
and national treatment

Individual countries’ commitments
to open markets in specific sectors — and how open those
markets will be — are the outcome of negotiations. The
commitments appear in “schedules” that list the sec-tors
being opened, the extent of market access being given in
those sectors (e.g. whether there are any restrictions on
foreign ownership), and any limitations on national
treatment (whether some rights granted to local companies
will not be granted to foreign companies). So, for example,
if a govern-ment commits itself to allow foreign banks to
operate in its domestic market, that is a market-access
commitment. And if the government limits the number of
licences it will issue, then that is a market-access
limitation. If it also says foreign banks are only allowed
one branch while domestic banks are allowed numerous
branches, that is an exception to the national treatment
principle.

These clearly defined commitments are “bound”:
like bound tariffs for trade in goods, they can only be
modified after negotiations with affected countries. Because
“unbinding” is difficult, the commit-ments are virtually
guaranteed conditions for foreign exporters and importers of
services and investors in the sector to do business.

Transparency

GATS says governments must publish all
relevant laws and regulations, and set up enquiry points
within their bureaucracies. Foreign companies and
governments can then use these inquiry points to obtain
information about regulations in any service sector. And
they have to notify the WTO of any changes in regulations
that apply to the services that come under specific
commitments.

Regulations: objective and reasonable

Since
domestic regulations are the most significant means of
exercising influence or control over services trade, the
agreement says governments should regulate services
reasonably, objectively and impartially. When a government
makes an administrative decision that affects a service, it
should also provide an impartial means for reviewing the
decision (for example a tribunal).

Recognition

When two
(or more) governments have agreements recognizing each
other’s qualifications (for exam-ple, the licensing or
certification of service suppliers), GATS says other members
must also be given a chance to negotiate comparable pacts.
The recognition of other countries’ qualifications must not
be discriminatory, and it must not amount to protectionism
in disguise. These recognition agreements have to be
notified to the WTO.

International payments and
transfers

Once a government has made a commitment to open
a service sector to foreign competition, it must not
normally restrict money being transferred out of the country
as payment for services supplied (“current transactions”) in
that sector. The only exception is when there are
balance-of-payments dif-ficulties, and even then the
restrictions must be temporary and subject to other limits
and conditions.

Progressive liberalization

The Uruguay
Round was only the beginning. GATS requires more
negotiations, which began in early 2000. The goal is to take
the liberalization process further by increasing the level
of commitments in schedules.

The annexes: services are not
all the same

International trade in goods is a relatively
simple idea to grasp: a product is transported from one
country to another. Trade in services is much more diverse.
Telephone companies, banks, airlines and accountancy firms
provide their services in quite different ways. The GATS
annexes reflect some of the diversity.

Movement of natural
persons

This annex deals with negotiations on individuals’
rights to stay temporarily in a country for the pur-pose of
providing a service. It specifies that the agreement does
not apply to people seeking perma-nent employment or to
conditions for obtaining citizenship, permanent residence or
permanent em-ployment.

Financial services

Instability in
the banking system affects the whole economy. The financial
services annex says gov-ernments have the right to take
prudential measures, such as those for the protection of
investors, de-positors and insurance policy holders, and to
ensure the integrity and stability of the financial system.
It also excludes from the agreement services provided when a
government is exercising its authority over the financial
system, for example central banks’ services. Negotiations on
specific commitments in financial services continued after
the end of the Uruguay Round and ended in late
1997.

Telecommunications

The telecommunications sector
has a dual role: it is a distinct sector of economic
activity; and it is an underlying means of supplying other
economic activities (for example electronic money
transfers). The annex says governments must ensure that
foreign service suppliers are given access to the public
telecommunications networks without discrimination.
Negotiations on specific commitments in tele-communications
resumed after the end of the Uruguay Round. This led to a
new liberalization pack-age agreed in February 1997.

Air
transport services

Under this annex, traffic rights and
directly related activities are excluded from GATS’s
coverage. They are handled by other bilateral agreements.
However, the annex establishes that the GATS will apply to
aircraft repair and maintenance services, marketing of air
transport services and computer-reservation services.
Members are currently reviewing the annex.

ENDS

IMPLEMENTATION ISSUES

Central to WTO future work
programme

No area of WTO work has received more attention
or generated more controversy in the last two years than the
issue of implementation.

For many developing countries the
issue of the implementation of Uruguay Round agreements has
been the focal point of WTO activity since before the 2nd
Ministerial Conference held in Geneva in May 1998.

The
issue involves all WTO agreements and all WTO member
governments. While it is difficult to forecast the outcome
of any discussions on the issue ahead of the Conference, it
is certain that the question of implementation will not only
be at the center of ministerial activity during the meeting
but that any broader work programme undertaken by the WTO
will be contingent on resolving the issue in a satisfactory
manner.

“Member governments have worked very hard on the
issue of implementation and there is a growing recognition
that implementation is central to our work. Developing
countries have won,” said Direc-tor-General Mike Moore.
“They have succeeded in focusing the attention of all
governments on the difficulties they have faced in
implementing our agreements. It is also clear that further
efforts to rebalance past agreements in any significant way
will require new negotiations. Implementation can thus
become another key building block in our future work. Many
small countries have expressed concern about a more complex
set of negotiations and their capacity to cope unless the
WTO in-creases its capacity to provide technical assistance.
They worry that unless such assistance is provided in
advance of any conclusion to the round, there will be more
implementation problems in the future. Clearly, no
broad-based work programme can take place without a
resolution to these difficult is-sues.”

Different WTO
member governments see the issue in different ways. For many
developing countries, and particularly for the
least-developed countries, capacity constraints have been a
major obstacle to the full implementation of Uruguay Round
agreements. A lack of financial, human and institutional
resources has prevented governments in these countries from
putting the often highly complex Uru-guay Round agreements
into effect.

In addition to these capacity constraints,
some developing countries take the view that the Uruguay
Round agreements have not delivered the economic benefits
that had been expected. Officials from these countries
believe that agreements on textiles, subsidies, agriculture,
intellectual property protec-tion, anti-dumping, sanitary
and phytosanitary measures and trade-related investment
measures do not adequately reflect the interests and
concerns of developing countries and need to be
“re-balanced.”

Some developed countries had initially been
reluctant to engage in the implementation debate and
officials from these countries took the line that addressing
the concerns spelled out in recent years by developing
countries amounts to amending or renegotiating the Uruguay
Round agreements. While some governments have said they are
prepared to entertain such a prospect, they have made it
clear that those proposals requiring amending agreements can
only be addressed inside a wider set of nego-tiations
encompassing areas of interest to their citizens.

The
issue has been at the forefront of the preparations for the
Doha Ministerial Conference. The de-bate was galvanized when
a group of seven countries, chaired by Uruguay, put forward
a compromise paper incorporating elements of the Seattle
proposals and offered a structure for dealing with this
is-sue. Under the terms of this paper, some issues would be
decided immediately, others would be de-cided at Doha while
the remainder would be settled in negotiations after
Doha.

The paper did not go as far as many developing
countries would have liked and went further than some
developed countries thought was politically possible. But
this text succeeded in shifting the de-bate and has been an
important element in subsequent attempts to bridge the gap
by the Chairman of the General Council, Stuart Harbinson
(Hong Kong, China) together with Director-General Mike
Moore.

Mr. Harbinson and the Director-General issued a
paper on 28 September 2001 which listed two an-nexes, one
for immediate decision and the other for decision at Doha.
The text formed the basis for negotiations up to the
Ministerial Conference.

Background timeline on the
implementation debate

The current implementation debate
arises from a decision by Ministers at the Geneva
Ministerial Con-ference in 1998. At that Conference,
Ministers agreed that implementation must be an important
part of future work at the WTO. Paragraphs 8 and 9 of the
Ministerial Declaration spell out their commit-ments:

8.
Full and faithful implementation of the WTO Agreement and
Ministerial Decisions is im-perative for the credibility of
the multilateral trading system and indispensable for
maintaining the momentum for expanding global trade,
fostering job creation and raising standards of living in
all parts of the world. When we meet at the Third Session we
shall further pursue our evaluation of the implementation of
individual agreements and the re-alization of their
objectives. Such evaluation would cover, inter alia, the
problems en-countered in implementation and the consequent
impact on the trade and development prospects of Members. We
reaffirm our commitment to respect the existing schedules
for reviews, negotiations and other work to which we have
already agreed.

9. We recall that the Marrakesh Agreement
Establishing the World Trade Organization states that the
WTO shall provide the forum for negotiations among its
Members con-cerning their multilateral trade relations in
matters dealt with under the agreements in the Annexes to
the Agreement, and that it may also provide a forum for
further negotia-tions among its Members concerning their
multilateral trade relations, and a framework for the
implementation of the results of such negotiations, as may
be decided by the Min-isterial Conference. …. we decide that
a process will be established under the direction of the
General Council to ensure full and faithful implementation
of existing agreements, and to prepare for the Third Session
of the Ministerial Conference. This process shall en-able
the General Council to submit recommendations regarding the
WTO’s work pro-gramme, including further liberalization
sufficiently broad-based to respond to the range of
interests and concerns of all Members, within the WTO
framework, that will enable us to take decisions at the
Third Session of the Ministerial Conference. In this regard,
the General Council will meet in special session in
September 1998 and periodically there-after to ensure full
and timely completion of its work, fully respecting the
principle of de-cision-making by consensus. The General
Council’s work programme shall encompass the
following:

(a) recommendations concerning:

(i) the
issues, including those brought forward by Members, relating
to im-plementation of existing agreements and
decisions;

(ii) the negotiations already mandated at
Marrakesh, to ensure that such ne-gotiations begin on
schedule;

(iii) future work already provided for under
other existing agreements and decisions taken at Marrakesh;

(b) recommendations concerning other possible future work
on the basis of the work programme initiated at
Singapore;

(c) recommendations on the follow-up to the
High-Level Meeting on Least-Developed Countries;

(d)
recommendations arising from consideration of other matters
proposed and agreed to by Members concerning their
multilateral trade relations.

Prior to the Seattle
Ministerial Conference in December 1999, a group of
developing countries pre-sented the General Council with a
list of some 150 elements for consideration on the
implementation agenda. The eight pages of elements were
broken down into two categories 1) issues to be decided
before that Ministerial Conference and 2) issues to be
agreed within one year of the Seattle confer-ence. The issue
of implementation was perhaps the single most discussed
issue in the run-up to Seat-tle, but as with all other
elements of the preparation for that meeting, there was no
consensus on an agreement.

Following the Seattle
conference, member governments agreed on a new approach to
working on the issue. On 8 May 2000, the General Council
established a framework for discussion and negotiation of
the implementation issue which was known as the
Implementation Review Mechanism (IRM). The IRM consists of
special sessions of the General Council meeting exclusively
on this question. Special Sessions of the IRM were held on
22 June–3 July and 18 October 2000.

On 15 December 2000
the General Council adopted a decision on seven
implementation measures. All member governments accepted
that these measures, which were mainly related to points of
clarifi-cation regarding subsidies, were modest in nature.
Nonetheless, the decisions were an indication that the
process itself was well established and that implementation
issues were at the core of WTO work

Additional Special
Sessions of the General Council devoted to implementation
took place on 27 April 2001 and 3 October 2001. The session
on 3 October was set to reach agreement on a roster of
issues laid out by Chairman Harbinson. But informal heads of
delegation meetings revealed that members could not agree on
that roster so the formal Special Session was suspended
after only a few minutes. At time of printing, it was
uncertain as to whether some implementation issues could be
agreed prior to the Doha Ministerial meeting.

ENDS

INTELLECTUAL PROPERTY (TRIPS)

Negotiations,
implementation and TRIPS Council work

This briefing
document focuses on the TRIPS issues raised in the lead-up
to the Doha Ministerial Conference. It does not cover all
the issues regularly handled in the TRIPS Council.

> An
outline of the WTO’s TRIPS Agreement can be found in the
section on intellectual property in “Trading into the
Future” (page 25 in the printed version, or go to
http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm6_e.htm
on the WTO website).

> More details can be found on the
WTO website. Follow … > trade topics > intellectual
property

or go straight to
http://www.wto.org/english/tratop_e/trips_e/trips_e.htm.

In
a nutshell

Intellectual property (or more accurately
trade-related aspects of intellectual property rights or
TRIPS) appears on the agenda for the Doha Ministerial
Conference in a number of ways. These are the main points —
more detailed explanations follow:

- Negotiations on
geographical indications. Already under negotiation in the
TRIPS Council, which oversees work in this area in the WTO,
is a multilateral system for notifying and register-ing
geographical indications. No deadline has been set for
completing these talks, and one pro-posal is for ministers
to set a deadline for concluding the negotiations.

In
addition, a number of countries want to negotiate expanding
to additional products the “higher” level of protection
currently given under the TRIPS Agreement to geographical
indica-tions for wines and spirits.

- A separate
declaration on TRIPS and health. In the preparations,
members have been negotiating a declaration clarifying the
relationship between intellectual property protection and
access to medicines or public health. This statement will
probably be separate from the main ministerial
declaration.

- Work on clarifying the relationship
between the WTO TRIPS Agreement and UN Con-vention on
Biological Diversity and other issues such as the protection
of traditional knowledge, and new technological
developments.

- Implementation issues, including current
obligations on technology transfer under the TRIPS
Agreement, and a technical issue known as “non-violation”
cases.

The discussions have covered proposed timetables
and deadlines. These include: the TRIPS Council completing a
report by the end of 2002 leading to decisions or
discussions in the next (i.e. the 5th) Ministerial
Conference; completing negotiations within the overall
timetable for negotiations set in the Doha declaration; or
combinations of these.

Geographical
indications

Geographical indications are place names or
names associated with a place used to identify the origin
and quality, reputation or other characteristics of products
(for example, “Champagne”, “Tequila” or “Roquefort”).
Protection required under the TRIPS Agreement is defined in
two articles.

All products are covered by Article 22. This
says geographical indications have to be protected in order
to avoid misleading the public and to prevent unfair
competition.

Article 23 provides a higher or enhanced
level of protection for geographical indications for wines
and spirits (subject to a number of exceptions, they have to
be protected even if misuse would not cause the public to be
misled). A number of countries want to extend this level of
protection to a wide range of other products, including food
and handicrafts. The agreement allows exceptions, such as
when a name has become a common (or “generic”)
term.

Information that members have supplied during a
fact-finding exercise shows that countries employ a wide
variety of legal means to protect geographical indications:
ranging from specific geographical indications laws to
trademark law, consumer protection law, or common law. The
TRIPS Agreement and current TRIPS work in the WTO takes
account of that diversity.

The agreement calls for
negotiations on two aspects of geographical indication
protection, although it does not say when these should take
place, nor when they should end:

- the creation of a
multilateral system for notifying and registering
geographical indications for wines (the 1996 Singapore
Ministerial Conference also called for preliminary work on
“spirits”) (Article 23.4).

The multilateral register. Since 1998, a
number of proposals for a system for notifying and
regis-tering geographical indications for wines (and
spirits) have already been submitted to the TRIPS Council.
In all cases, participation in the system would be
voluntary. One group of proposals sees the system as a
database: members would report the geographical indications
that they protect, and other members would take the
information into account when they provide their own
protection. Another group includes obligations — subject to
certain conditions — for WTO members to protect the names
listed in the register.

Extending the higher level of
protection. A number of countries have proposed extending
the higher level of protection beyond wines and spirits to
other products, including handicrafts, agricul-tural
products and other beverages. In the preparations for the
Doha ministerial declaration, the dis-cussion has included
the question of whether there should be negotiations on this
subject at all, or whether further study is needed before
any decision is reached on whether to negotiate. WTO
mem-bers have also discussed whether any negotiations would
be for all products, or only some — and whether those would
have to be decided in advance.

Some members have linked
this to the current negotiations on agriculture, saying that
they would only agree on substantial progress in agriculture
if there is similar progress on geographical indications.
Some others have described it as a condition for negotiating
further reductions in industrial tariffs. Some developing
countries have raised this as an “implementation” issue (see
page 19).

One proposal has even been submitted to the
agriculture negotiations themselves, describing protec-tion
for geographical indications as a market access issue for
agricultural products. According to this argument,
geographical indications improve product differentiation,
which is an important feature of competition. Consumers
would benefit because they are offered more choice with more
information about product quality. Producers would also
benefit because they can develop quality products and are
free from unfair or misleading competition in markets that
import their products, according to this argument.

or go to straight to
http://www.wto.org/english/tratop_e/agric_e/negoti_e.htm

or
see the press briefing note on agriculture

TRIPS and
health

> see also the fact sheet on TRIPS and
pharmaceutical patents,

on the WTO website
at

http://www.wto.org/english/tratop_e/trips_e/pharmpatent_e.htm

The fact that all members agree on the need for a
ministerial statement on TRIPS and health, shows that
everyone agrees that this issue is vitally important. All
members also share the view that intel-lectual property
protection is necessary for creating new medicines, and that
the TRIPS Agreement must be respected.

The objective of a
ministerial text on TRIPS and health is to clarify what
governments can do under the TRIPS Agreement, and to reduce
their uncertainties about using the flexibilities that are
built into the agreement. A separate declaration on this
subject seems to be favoured among most WTO
mem-bers.

Among the flexibilities most commonly discussed
are compulsory licensing and parallel imports. Compulsory
licensing is when governments authorize other manufacturers
to make a drug under li-cence without the patent owner’s
approval. This is allowed under certain conditions in the
TRIPS Agreement .

Parallel importing is where a product
sold more cheaply in one country is imported into another
with-out the patent holder’s permission. Countries’ laws
differ on whether they allow parallel imports. The TRIPS
Agreement simply states that governments cannot bring legal
disputes to the WTO on this is-sue.

One issue member
governments have discussed is the scope of the proposed
ministerial declaration. Some favour emphasizing public
health objectives as a whole. Others prefer to focus more
specifi-cally on ensuring poorer populations have access to
medicines, particularly to deal with large-scale,
life-threatening epidemics (or “pandemics”) such as
HIV/AIDS, malaria, tuberculosis and other dis-eases.

Many
developing countries have proposed that the declaration
should state that nothing in the TRIPS Agreement prevents
governments from undertaking public health policies, and
that members should refrain from bringing legal disputes to
the WTO on this subject.

Some developed countries want to
ensure that clarifications do not weaken legal rights and
obliga-tions under the agreement. They want ministers to
affirm strongly that intellectual property protection helps
health policies by encouraging new drugs to be invented — a
view that all members share, al-though with differing
degrees of emphasis. And they are reluctant to accept
restraints on their right to use the dispute settlement
procedures.

One of the details being discussed is the
difficult question of how countries with limited
manufactur-ing capabilities can take advantage of compulsory
licensing. At the centre of the discussion is a provi-sion
in the TRIPS Agreement which says that products made under a
compulsory licence must be supplied predominantly for the
domestic market.

Article 27 of the TRIPS Agreement defines
the types of inventions which have to be eligible for
pat-ent protection and those which can be exempt. These
include both products and processes, and they cover all
fields of technology.

Part (b) of paragraph 3 (i.e.
Article 27.3(b)) covers biotechnological inventions. It is
currently under review in the TRIPS Council, as required by
the TRIPS Agreement. Some countries have broadened the
discussion to cover biodiversity and traditional knowledge.
They are now seeking a ministerial statement on the
subject.

Broadly speaking, Article 27.3(b) allows
governments to exclude plants, animals and “essentially”
biological processes (but micro-organisms, and
non-biological and microbiological processes have to be
eligible for patents). However, plant varieties have to be
eligible either for patent protection or through a system
created specifically for the purpose (“sui generis”), or a
combination of the two. For example, countries could enact a
plant varieties protection law based on a model of the
International Union for the Protection of New Varieties of
Plants (UPOV).

The review of Article 27.3(b) began in 1999
as required by the TRIPS Agreement. The topics raised in the
TRIPS Council’s discussions include: the pros and cons of
various types of protection for new plant varieties
(patents, UPOV, etc); how to handle moral and ethical issues
(e.g. whether invented life forms should be eligible for
protection); how to deal with traditional knowledge and the
rights of the communities where genetic material originates
(including benefit sharing when inventors in one country
have rights to creations based on material obtained from
another country); and whether there is a conflict between
the TRIPS Agreement and the UN Convention on Biological
Diversity (CBD).

Countries have expressed a range of
opinions on all these subjects. For example, one proposed
idea would require patent applicants to disclose the origin
of genetic material used, which advocates say would make
benefit sharing easier to implement. An alternative view
emphasizes benefit sharing through prior agreement between
the researchers and the host country where the genetic
material originates, instead of disclosure in patent
applications.

Some are seeking clarification on issues
such as the meaning of the term “micro-organism” and the
difference between “biological” and “microbiological”
processes. Some countries say life forms and living
creatures should not be patented and that ethical questions
should also be discussed.

Some developing countries want
to make sure that the TRIPS Agreement takes account of more
spe-cific concerns such as allowing their farmers to
continue to save and exchange seeds that they have
harvested, and preventing anti-competitive practices which
threaten developing countries’ “food sov-ereignty”. And so
on.

Many of these points underlie the discussions on the
draft ministerial declaration, although the text will not go
into detail — it will establish a means of addressing these
points.

New technologies

New technologies can cover
anything from biotechnology to electronic commerce. Members
differ on whether the ministerial declaration’s portion on
TRIPS should refer to the TRIPS Agreement keeping abreast of
new technologies as a whole. Some biotechnology issues are
raised under Article 27.3(b), biodiversity and benefit
sharing. The TRIPS Council’s discussions on e-commerce have
raised a number of questions including Internet domain names
and electronic trading in copyrighted material. The TRIPS
Council is also following discussions outside the WTO,
particularly in the World Intel-lectual Property
Organization.

Non-violation cases (Article 64.2)

In
principle, disputes in the WTO involve allegations that a
country has violated an agreement or bro-ken a
commitment.

Under the goods agreement (GATT) and the
services (GATS) specific commitments, countries can complain
to the Dispute Settlement Body if they can show that they
have been deprived of an ex-pected benefit because of some
governmental action (for example a new production subsidy on
an item on which a tariff concession has been made) — even
if it does not violate one of these agree-ments. The purpose
of allowing these “non-violation” cases is to preserve the
balance of advantage (such as market-access opportunities)
struck during multilateral negotiations.

The TRIPS
Agreement (Article 64.2) temporarily banned non-violation
disputes. It says non-violation complaints cannot be brought
to the WTO dispute settlement procedure during the first
five years of the WTO Agreement (i.e. 1995–99)

There are
different views about whether this ban continues. However,
the TRIPS Council has contin-ued its discussion on whether
non-violation complaints should be allowed in intellectual
property, and if so, to what extent. At least one country
says non-violation cases should be allowed in order to
dis-courage members from engaging in “creative legislative
activity” that would allow them to get around their TRIPS
commitments. Some would like to see the ban continued, and
have been calling for min-isters to state this in their Doha
declaration. Some have suggested additional
safeguards.

Opinions also differ as to whether
non-violation cases can now automatically be brought to the
WTO dispute settlement procedure, or whether the TRIPS
Agreement requires the “scope and modalities” of
non-violation cases to be sorted out first.

Developing
countries’ compliance

On 1 January 2000, developing
countries had to comply with the TRIPS Agreement.
(Least-developed countries have until 1 January 2006, with
the possibility of a further delay.) The TRIPS Council has
begun a two-year programme of reviewing the developing
countries’ TRIPS-related laws. A number of developing
countries say they have difficulty implementing the
agreement and have asked for some deadlines to be postponed,
particularly the 2006 deadline for least-developed
countries, and more generally, developing countries’
obligations on pharmaceutical and biotechnological
inventions. Some developed countries say it is too soon to
consider postponing the 2006 deadline.

Technology
transfer

In the preparations for the Doha Ministerial
Conference, technology transfer has been discussed as an
“implementation” issue — i.e. among the problems developing
countries say they face in implement-ing the current WTO
agreements. Developing countries stress that technology
transfer is a key part of the TRIPS Agreement since it
appears in the objectives (Article 7), principles (Article
8), and a num-ber of other articles. They propose action to
promote more effective implementation of technology transfer
provisions in general (Articles 7 and 8), and developed
countries’ obligations to provide in-centives for their
enterprises and institutions to transfer technology to
least-developed countries (Arti-cle 66.2)

Review of the
TRIPS Agreement

The TRIPS Council began reviewing the
TRIPS Agreement in 2000, as required by Article 71.1. Some
countries want the review to focus on an examination of how
well the TRIPS Agreement has met its objectives and
principles.

The objectives are spelt out in Article 7
which says “The protection and enforcement of intellectual
property rights should contribute to the promotion of
technological innovation and to the transfer and
dissemination of technology, to the mutual advantage of
producers and users of technological knowl-edge and in a
manner conducive to social and economic welfare, and to a
balance of rights and obli-gations.”

The principles
(Article 8) allow countries to “adopt measures necessary to
protect public health and nutrition, and to promote the
public interest in sectors of vital importance to their
socio-economic and technological development, provided that
such measures are consistent with the provisions of” the
TRIPS Agreement; and to take action “to prevent the abuse of
intellectual property rights by right holders or the resort
to practices which unreasonably restrain trade or adversely
affect the interna-tional transfer of technology.”

Some
other members want the review to be based on actual
experience with implementation.

ENDS

TEXTILES AND
CLOTHING

Nearing the penultimate stage

At the end of
the Uruguay Round, developing countries considered the
Agreement on Textiles and Clothing (ATC), which provides for
the gradual dismantling of bilateral import quotas over a
ten-year period, to have been a major result in their
favour. Today — nearly at the penultimate stage of ATC
implementation — many developing countries are calling for
the acceleration of trade liberalization in this sector to
redress what they consider to be an imbalance in the
implementation of the Uruguay Round results.

Developing
countries look at textiles and clothing — exports of which
amounted to $356 billion in 2000 representing 7.7% of world
trade in manufactures — as one major manufacturing sector in
which they have competitive advantage. They also believe
that trade success in this area would be an important step
up in the industrial development ladder.

In the former
GATT, the Multifibre Arrangement (MFA) governed a large
portion of the exports of textiles and clothing from
developing countries, to the main developed countries. Under
the MFA (1974-94), developed countries were able to
establish quotas on textiles and clothing outside normal
GATT rules.

The ATC requires members to liberalize trade
in textiles and clothing in two ways. Members must
progressively bring (“integrate”) all textiles and clothing
products under normal WTO rules in four steps (16% for the
first stage in 1995-97, a further 17% at the second stage
for 1998-2001, a further 18% for the third stage in 2002-04
and the remaining 49% in the final stage on 1 January 2005).
Members that maintain quota restrictions (Canada, the
European Union, and the United States), must progressively
enlarge the quotas by increasing the annual growth rates by
a set percentage at each stage. When the products subject to
quotas are integrated, the quotas are removed.

A special
safeguard mechanism protects members from damaging surges in
imports during this tran-sitional period. A quasi-judicial
body — the Textiles Monitoring Body (TMB) — supervises the
im-plementation of the ATC, including the examination of
disputes.

The Council for Trade in Goods, assisted by a
report from the TMB, conducts a major review of the ATC
implementation before the end of each stage of the
integration process. At the review of the first stage of
integration held in 1997-1998, developing-country textile
exporters voiced serious concerns over what they view as
lack of meaningful commercial benefits for them as the major
importers had opted to integrate products of less export
interest to developing countries with few quotas being
re-moved. They have also criticized new restrictions imposed
by a major importer through the use of the ATC safeguards as
well as other measures taken by importing countries such as
anti-dumping actions and changes in country-of-origin
rules.

There is also the fear that with most of the quotas
being kept for the final stage, the major importers might
not be able to meet their obligations. A group of
developing-country exporters (the ITCB) has suggested that
to secure liberalization of the sector, major importers be
required to take immediate steps to improve the quality of
these implementation programmes.

The major importing
members maintain that they have been observing scrupulously
the requirements of the Agreement. In turn, they have
criticized a lack of market-access improvements in other
mem-bers in this.

The Goods Council in October 2001
conducted its second major review of ATC implementation. In
a comprehensive report on the second integration stage, the
TMB noted that despite a higher share of clothing products
in the third stage as compared to previous stages,
developing exporting countries continue to be seriously
disappointed by the significant number of restrictions still
in place and the overall lack of higher-value products. On
the other hand, the TMB noted that the major
importers—Canada, the European Union and the United
States—would have complied with the ATC’s technical
requirement of integrating, by 1 January 2002, at least 51%
of their 1990 volume of textile imports into normal WTO
rules and that their textile and clothing imports have been
increasing continuously.

The TMB has also pointed to the
sharp decrease in the use of transitional safeguard measures
during the second integration stage. This could be explained
by the realization among members of the stiff requirements
for justifying such measures as laid out in the results of
the dispute settlement process on the early cases.

The TMB
has also commended Norway for eliminating, on a unilateral
basis, all its restrictions on textiles and clothing on 1
January 2001—four years ahead of schedule.

Agreement on
Textiles and Clothing

Operation of the integration process
of Article 2

(paragraphs 6 and 8)

% of volume of 1990
imports

ENDS

INFORMATION TECHNOLOGY (IT)
PRODUCTS

Free trade for a dynamic trade sector

A WTO
agreement is helping push the information technology
revolution forward. At the beginning of this year, most of
the world trade in information technology products (worth
$769 billion in 1999 for office and telecom equipment, a
large part of which are IT products) became completely free
of tariffs under the WTO Information Technology Agreement
(ITA). This agreement has been reducing customs duties on IT
products such as computers and telecom equipment since 1997,
and benefiting offices and consumers across the globe
through lower prices.

From the 29 participants that
negotiated the ITA during WTO’s First Ministerial Conference
in Sin-gapore in December 1996, membership has now risen to
56 that account for 93% of world trade in IT products. The
new participants include many developing countries,
transition economies and even governments currently
negotiating their WTO membership. At an IT symposium
organized by the WTO Secretariat in July 1999, several
industry representatives attested to the dynamic role of
infor-mation technology in promoting economic growth in
developing countries.

Participation in the ITA means that
the country must eliminate tariffs and all other duties and
charges on covered IT imports from all WTO members by 1
January 2000. Some participants have been granted longer
implementation periods for a few products. The agreement
lists in two annexes the products covered, which can be
grouped into the following six categories: computers,
software, tele-com equipment, semiconductors, semiconductor
manufacturing equipment and scientific instruments.

Talks
on expanding the product coverage (or “ITA II”) began in
1997 when participants began pro-posing additional IT
products for tariff elimination. Negotiations intensified in
1998 during which some participants tabled a joint ITA II
list. The talks, however, failed to produce an ITA II list
accept-able to all participants. One point of contention was
the proposed addition of certain electronic con-sumer goods
that are also used with computer products.

At the Seattle
Ministerial Conference, there were reports of movement
towards an ITA II deal. Since then, consultations among
delegations on ITA II have continued, and another attempt
for ITA II at the Doha Ministerial cannot be
discounted.

The current ITA deals only with the
elimination of tariffs and not with other trade barriers. At
the WTO’s IT symposium in 1999, industry representatives
complained that different national safety standards and
import licensing requirements have resulted in additional
shipment costs — through delays and additional paperwork —
that have reduced the benefits of ITA tariff cuts. In the
ITA Committee, participants have agreed to examine
non-tariff barriers.

In November 2000, the ITA Committee
approved a one-year work programme on non-tariff measures
(NTMs) facing IT products. During the first phase, the
Committee will compile an inventory of NTMs that have been
identified by participants as impediments to trade in ITA
products. During the second phase, participants will examine
the economic and developmental impact of such measures on
trade in IT products and the benefits which would accrue to
participants from addressing their undue trade-distorting
effects. The third phase would be completed by November 2001
when the Committee meets to consider the outcomes of Phase I
and II.

When Ministers approved the
results of the Uruguay Round negotiations in Marrakesh in
April 1994, they took a decision to begin a comprehensive
work programme (see below) on trade and environ-ment in the
WTO. During the past six years, this work programme has
provided the focus of discus-sions in the Committee on Trade
and Environment (CTE). The CTE’s main aim is to build a
con-structive relationship between trade and environmental
concerns. The CTE has a two-fold mandate: first “to identify
the relationship between trade measures and environmental
measures in order to promote sustainable development”;
second, “to make appropriate recommendations on whether any
modifications of the provisions of the multilateral trading
system are required, compatible with the open, equitable and
non-discriminatory nature of the system.”

This broad-based
mandate covers goods, services, and intellectual property
rights and builds on work carried out in the previous GATT
Group on Environmental Measures and International Trade.
Since 1997, the CTE has adopted a thematic approach to its
work to broaden and deepen the discussions and to allow all
items of the work programme to be addressed in a systematic
manner. Discussions of the items on the work programme have
been clustered into two main areas: issues relevant to
market ac-cess and issues related to the linkages between
the multilateral environment and trade agendas.

As
directed by the Marrakesh Ministerial Decision, the CTE
submitted reports on the progress on all items of its work
programme to the 1996 Ministerial Conference in Singapore,
the 1998 Ministerial Conference in Geneva and the
Ministerial Conference in Seattle in 1999. The CTE will
submit an-other report to the 2001 Ministerial Conference in
Doha.

Several WTO symposia have been held with
representatives of civil society in recent years on the
trade and environment interface. The most recent one in July
2001 featured a working session on trade and environment,
one of ten topics discussed in a public event entitled
“Issues Facing the World Trading System”.

Work of the CTE

The CTE has brought environmental and sustainable
development issues into the mainstream of the WTO’s work.
Several important parameters guide the CTE’s work. The first
is that WTO competency for policy coordination in this area
is limited to trade and those trade-related aspects of
environmental policies which may result in significant trade
effects for its members. In other words, it is not intended
that the WTO should become an environmental agency. Nor
should it get involved in reviewing na-tional environmental
priorities, setting environmental standards or developing
global policies on the environment. That will continue to be
the task of national governments and of other
intergovernmen-tal organizations better suited to the task.
The second parameter is that increased national coordination
as well as multilateral cooperation is necessary to address
environmental concerns. The third is that secure
market-access opportunities are essential to help developing
countries work towards sustain-able development.

The
contribution which the multilateral trading system makes to
environmental protection was recog-nized at the United
Nations Conference on Environment and Development (the Earth
Summit) in 1992, which stated that an open, equitable and
non-discriminatory multilateral trading system has a key
contribution to make to national and international efforts
to better protect and conserve environ-mental resources and
promote sustainable development.

In its first report in
1996, the CTE recognized that trade and environment are
important areas of pol-icy-making and that they should be
mutually supportive in order to promote sustainable
development. The report noted that the multilateral trading
system has the capacity to further integrate environ-mental
considerations and enhance its contribution to the promotion
of sustainable development with-out undermining its open,
equitable and non-discriminatory character.

Some of the
main points of discussion of the CTE’s work programme since
1996 include the following:

The relationship between the
provisions of the multilateral trading system and trade
measures for environmental purposes, including those
pursuant to multilateral environ-mental agreements

A
range of provisions in the WTO can accommodate the use of
trade-related measures needed for en-vironmental purposes,
including measures taken pursuant to multilateral
environmental agreements (MEAs). Those that are cited
regularly as being of key importance are the provisions
relating to non-discrimination (MFN and national treatment)
and to transparency. Beyond that, and subject to certain
import conditions, Article XX of GATT allows WTO members
legitimately to place public health and safety and national
environmental goals ahead of their general obligation not to
raise trade restrictions or to apply discriminatory trade
measures. These provisions have been a major focus of work
for the CTE and will be kept under review.

Trade measures
applied pursuant to MEAs

Throughout the discussions on
this issue in the WTO, it has become clear that the
preferred approach for governments to take in tackling
transboundary or global environmental problems is through
coop-erative, multilateral action under an MEA. While some
MEAs contain trade provisions, trade restric-tions are not
the only nor necessarily the most effective policy
instrument to use in MEAs. In certain cases they can play an
important role. It has also been stated that the WTO already
provides broad and valuable scope for trade measures to be
applied pursuant to MEAs in a WTO consistent manner.

The
CTE has held several Information Sessions with the
Secretariats of various MEAs to discuss the trade-related
developments in these agreements. At a session in June 2001,
the following MEA sec-retariats gave presentations:
Convention on International Trade in Species of Wild Fauna
and Flora (CITES); Basel Convention on Transboundary
Movements of Hazardous Wastes and their Disposal; Montreal
Protocol on Substances that Deplete the Ozone Layer; UN
Convention on Biological Diver-sity (CBD); UN Framework
Convention on Climate Change; the Rotterdam (PIC)
Convention; the Stockholm (POPs) Convention and the UN Fish
Stocks Agreement.

Several MEAs noted that the focus of
most environmental agreements is on developing mechanisms to
assist parties to comply with their obligations in a
flexible and non-confrontational manner, thereby preventing
disputes from arising. While CITES and the Montreal Protocol
had long-standing mecha-nisms in place to facilitate
compliance, other MEAs, such as the Basel Convention and the
recent Rotterdam (PIC) and Stockholm (POPs) Conventions,
were in the process of developing non-compliance regimes.
The UNFCCC gave a thorough presentation of the
non-compliance regime en-visaged for the Kyoto Protocol, in
which compliance rests on market-based instruments.

It was
noted that compliance and enforcement in MEAs, as in the
WTO, is a dynamic process. MEAs are designed to facilitate
compliance through creating incentives and providing
financial and technol-ogy transfer; however, there is no one
size fits all for compliance in MEAs.

Other MEA
secretariats which have participated in the CTE’s
discussions include: the Montreal Proto-col on Substances
that Deplete the Ozone Layer; the Intergovernmental Forum on
Forests; and the Inter-national Tropical Timber
Organization.

Dispute settlement

A related item
concerns the appropriate forum for the settlement of
potential disputes that may arise over the use of trade
measures pursuant to MEAs. Should such disputes be addressed
in the WTO or to the dispute settlement procedures that
exist in the MEAs themselves? There is general agreement
that in the event a dispute arises between WTO members who
are also signatories to an MEA, they should try first to
resolve it through the dispute settlement mechanisms
available under that MEA. Were a dispute to arise with a
non-party to an MEA, but with another WTO member, the WTO
would provide the only possible forum for resolving the
dispute.

The CTE agrees that better policy coordination
between trade and environmental policy officials at the
national level can help prevent situations from arising in
which the use of trade measures applied pursuant to the MEAs
could become subject to disputes. Furthermore, it is
unlikely that problems would arise in the WTO over trade
measures agreed and applied among parties to an MEA. In the
event of a dispute, however, WTO members are confident that
the WTO dispute settlement provisions would be able to
tackle any problems which arise in this area, including
those cases requiring input from environmental experts. Some
governments, however, have said they are interested in
clarifying WTO rules to avoid future conflicts.

Eco-labelling

Eco-labelling programmes are important
environmental policy instruments. Eco-labelling was
dis-cussed extensively in the GATT and the CTE and TBT
Committee have had exhaustive discussions on labelling
schemes and other related issues. A key WTO requirement is
that environmental meas-ures that incorporate trade
provisions or that affect trade significantly should not
discriminate between home-produced goods and imports, nor
between imports from or exports to different trading
partners. Non-discrimination is the cornerstone of secure
and predictable market access and undistorted com-petition:
consumers are guaranteed a wider choice and producers better
access to the full range of market opportunities. Subject to
that requirement being met, WTO rules place essentially no
con-straints on the policy choices available to a country to
protect its own environment against damage either from
domestic production or from the consumption of domestically
produced or imported prod-ucts.

The CTE has acknowledged
that well-designed, eco-labelling programmes can be
effective instru-ments of environmental policy. It notes
that in certain cases such programmes have raised
significant concerns about possible trade effects. An
important starting point for addressing some of these trade
effects is to ensure adequate transparency in the
preparation, adoption and application of eco-labelling
programmes. Interested parties from other countries should
also be allowed to voice their concerns. Discussion is
continuing on how the use in eco-labelling programmes of
criteria based on non-product-related processes and
production methods should be treated under the rules of the
WTO Agreement on Technical Barriers to Trade.

WTO
transparency provisions

The WTO transparency provisions
fulfil an important role in ensuring the proper functioning
of the multilateral trading system. They help to prevent
unnecessary trade restrictions and distortions and ensure
that WTO members provide information about changes in their
regulations. They can also pro-vide a valuable first step in
ensuring that trade and environment policies are developed
and imple-mented in a mutually supportive way. Trade-related
environmental measures should not be required to meet more
onerous transparency requirements than other measures that
affect trade. The CTE has stated that no modifications to
WTO rules are needed to ensure adequate transparency for
trade-related environmental measures. In 1998 the CTE also
established a WTO Environmental Database which can be
accessed electronically by WTO members. The WTO Secretariat
up-dates this database annually by reviewing all the
environment-related notifications.

Export of domestically
prohibited goods

During the mid-1980’s, concerns were
raised by a number of developing country GATT contracting
parties that they were importing certain hazardous or toxic
products without knowing the full envi-ronmental or public
health dangers such products could pose. In the late 1980’s,
a GATT Working Party examined ways of treating trade in
goods which are severely restricted or banned for sale on
the domestic market of an exporting country. A key
consideration was that the importing country should be fully
informed about the products it was receiving and have the
right to reject them if it felt such products caused
environmental or public health problems.

Several MEAs
have been negotiated in the last few years to deal with
problems of trade in environ-mentally hazardous products
(e.g. the Basel Convention and London Guidelines). The WTO
does not intend to duplicate work that has already been
accomplished elsewhere in the area of domestically
prohibited goods. WTO members, in the context of the CTE,
have agreed to support the efforts of the specialized
inter-governmental environmental organizations that are
helping to resolve such problems. However, they have noted
that there may be a complementary role for the WTO to play
in this area.

Trade liberalization and sustainable
development

The CTE continues to tackle this item of its
work programme in the context of the built-in agenda of
further trade liberalization initiatives contained in the
results of the Uruguay Round negotiations. WTO members
participating in the CTE have noted that the removal of
trade restrictions and distor-tions, in particular high
tariffs, tariff escalation, export restrictions, subsidies
and non-tariff barriers, has the potential to yield benefits
for both the multilateral trading system and the
environment. Sev-eral have said this should be a key
objective of future trade liberalization negotiations and
could apply to agriculture and fisheries, energy, forestry,
non-ferrous metals, textiles and clothing, leather and
en-vironmental services. Discussions to date have
highlighted areas where the removal of trade restric-tions
and distortions can be beneficial for the environment, trade
and development, providing “win-win-win” opportunities.

Trade in services and TRIPS

The CTE also examines the
links between environmental measures and the WTO’s services
and in-tellectual property agreements. With respect to the
General Agreement on Trade in Services (GATS) and the
environment, the CTE has noted that its discussions have so
far not led to the identification of any measures that
members feel may be applied for environmental purposes to
services trade which are not already adequately covered by
GATS provisions.

In the case of intellectual property
rights, WTO members have acknowledged that the Agreement on
Trade-Related Intellectual Property Rights (TRIPS) plays an
essential role in facilitating access to and the transfer of
environmentally-sound technology and products. However,
further work is required in this area, including clarifying
the relationship between the TRIPS Agreement and the
Convention on Biological Diversity.

While many
governments believe the two agreements to be mutually
supportive, some also seek as-surances that the agreements
are implemented in a complementary manner. Others call on
the need to develop an international framework to protect
genetic resources and traditional knowledge.

Several
intergovernmental organizations have also briefed members of
the CTE on related work, in-cluding the CBD, the Food and
Agriculture Organization (FAO) and the World Intellectual
Property Organization (WIPO).

Preparations for Doha

Over
the last two years some WTO member governments have sought
further discussion in CTE on the precautionary principle.
Some believe it is necessary to help to build a common
understanding of how to manage risks in situations where
there is scientific uncertainty about the effects on human
health and the environment. The EU, in particular, has
called for the clarification of the use of this principle in
the WTO in order to ensure that it is not used in an
arbitrary way or as a form of protec-tionism. Whilst some
governments support the emphasis on science-based decision
making, several note the lack of an internationally agreed
definition of this concept and cautioned against invoking
precaution to justify protectionism.

WTO government
delegations still have clearly divergent views on whether
any negotiations are ap-propriate in the area of trade and
environment, and more specifically on the nature of any
further work on the relationship between the WTO and MEAs,
on eco-labelling and on precaution. Some have mentioned
possible exploration of a future mandate for the CTE on the
relationship between the WTO and MEAs, and also regarding
further work on eco-labelling in the TBT Committee, provided
there are clear commitments not to weaken existing
disciplines. However, for other governments this is going
either too far or not far enough, at least at the present
stage. Precaution remains a rather divisive issue.

The
“win-win” or even “win-win-win” situations (for trade,
environment and development), specifi-cally with regard to
environmentally damaging subsidies, especially in the
fisheries area, may require a clarification of the role of
the CTE in a negotiating context.

ENDS

TRADE AND
INVESTMENT

Negotiate, or continue to study?

Since
1997, WTO members have been engaged in analysis and debate
about the relationship between international trade and
investment, and its implications for economic growth and
development. In the Working Group on the Relationship
between Trade and Investment, members have examined a range
of international investment instruments and existing
agreements, and have debated the possible pros and cons of
negotiating a multilateral framework of investment rules in
the WTO. UNCTAD has played an important role in this
analytical process, particularly in helping WTO delegations
better un-derstand the development dimension of this
subject.

The WTO already has limited provisions on certain
trade aspects of foreign investment. The Agree-ment on
Trade-Related Investment Measures (TRIMs) elaborates on
existing GATT provisions pro-hibiting government
requirements for investors to purchase inputs locally or to
sell their output do-mestically rather than exporting it.
The General Agreement on Trade in Services (GATS) has rules
relating to the establishment by a foreign service supplier
of a “commercial presence” in an overseas market.

But the
main way in which rules are applied to FDI at present is
through government-to-government Bilateral Investment
Treaties (BITs). UNCTAD estimates over 1,700 BITs are in
operation today, along with around 1,900 double taxation
treaties. Historically, most of these treaties were signed
be-tween developed and developing countries but recently,
the number of BITs among developing coun-tries has been
increasing.

For the Doha Ministerial, a number of
developed and developing WTO members are supporting
pro-posals—similar to those tabled at the Seattle
Ministerial—-recommending that a decision be taken to begin
negotiating a WTO agreement on foreign direct investment
(FDI). They argue that the existing international regime of
individual BITs plus regional investment agreements lead to
confusion. They say that a WTO agreement would establish a
stable, non-discriminatory environment that would in-crease
investment flows.

These members have made it clear that
the agreement they are proposing to negotiate in the WTO
bears no relationship to the OECD’s Multilateral Agreement
on Investment (MAI)— in the WTO, negotiations would start
from a blank sheet of paper.

At the same time, many
developing countries have made it clear that they are
opposed to negotiation on this subject in the WTO, at least
for the time being, and prefer to continue the analysis and
study in the Working Group. They argue that the existing
BITs already provide adequate legal protection to investors,
and question whether a WTO agreement would indeed increase
investment flows. They have expressed concern that a
multilateral agreement would add obligations to developing
countries while limiting their ability to align investment
inflows with national development objectives.

Reflecting
these divergent views, the draft Ministerial Declaration
issued on 26 September 2001 con-tains two options for a
decision to be taken in Doha on the nature of the future
work on investment in the WTO:

- “We agree to
negotiations which shall aim to establish a multilateral
framework of rules to secure transparent, stable and
predictable conditions for long-term cross-border
investment, particularly foreign direct investment. The
framework shall reflect in a balanced manner the interests
of home and host countries, and take due account of
governments’ regulatory responsibilities and eco-nomic
development objectives. It shall include as core elements
provisions on scope and defini-tion, transparency,
non-discrimination, pre-establishment commitments based on a
GATS-type approach, and the settlement of disputes between
governments. The special development, trade and financial
needs of developing and least-developed country participants
shall be taken into ac-count as an integral part of the
framework, which shall enable members to undertake
obligations commensurate with their individual needs and
circumstances. The negotiations shall pay due re-gard to
other relevant WTO provisions and to existing bilateral and
regional arrangements on in-vestment. We commit ourselves to
ensure that appropriate arrangements are made for the
provi-sion of technical assistance and support for capacity
building both during the negotiations and as an element of
the agreement to be negotiated.”

or

- “The Working
Group on the Relationship between Trade and Investment shall
undertake further focused analytical work, based on
proposals by members. A report on this work shall be
presented to the Fifth Session of the Ministerial
Conference.”

ENDS

TRADE AND COMPETITION
POLICY

Working group set up by Singapore
ministerial

As government barriers to trade and investment
have been reduced, there have been increasing con-cerns that
the gains from such liberalization may be thwarted by
private anti-competitive practices. There is also a growing
realization that mutually supportive trade and competition
policies can con-tribute to sound economic development, and
that effective competition policies help to ensure that the
benefits of liberalization and market-based reforms flow
through to all citizens.

Approximately 80 WTO member
countries, including some 50 developing and transition
countries, have adopted competition laws, also known as
“antitrust” or “anti-monopoly” laws. Typically, these laws
provide remedies to deal with a range of anti-competitive
practices, including price fixing and other cartel
arrangements, abuses of a dominant position or
monopolization, mergers that limit com-petition, and
agreements between suppliers and distributors (“vertical
agreements”) that foreclose markets to new competitors. The
concept of competition “policy” includes competition laws in
addi-tion to other measures aimed at promoting competition
in the national economy, such as sectoral regulations and
privatization policies.

The WTO Working Group on the
Interaction between Trade and Competition Policy (WGTCP) was
established at the Singapore Ministerial Conference in
December 1996 to consider issues raised by members relating
to the interaction of these two policy fields. Since its
initial meeting in July 1997, the Group has examined a wide
range of such issues organized into a Chairman’s Checklist.
The ap-proximately 180 submissions received by the Working
Group from members thus far attest to the keen interest that
has been shown by members in the subject.

Since 1999,
pursuant to a decision by the General Council of the WTO,
the Working Group have been examining the following three
topics in addition to the Checklist of Issues:

- the
relevance of the fundamental WTO principles of national
treatment, transparency, and most-favoured-nation treatment
to competition policy and vice versa;

- approaches to
promoting cooperation and communication among members,
including in the field of technical cooperation; and

-
the contribution of competition policy to achieving the
objectives of the WTO, including the pro-motion of
international trade.

At the beginning of the year, the
Group agreed to also address the following points, as
suggested by delegations:

- address concerns by some
developing countries regarding both the general impact of
implement-ing competition policy on their national economies
and the particular implications that a multilat-eral
framework on competition policy might have for
development-related policies and pro-grammes;

- continue
to explore the implications, modalities and potential
benefits of enhanced international cooperation, including in
the WTO, in regard to the subject-matter of trade and
competition pol-icy; and

- continuing focus on the issue
of capacity building in the area of competition law and
policy.

While the relevance of WTO principles to
competition policy and the need for enhanced cooperation
among members in addressing anti-competitive practices were
affirmed by a number of members, views differed as to the
need for action at the level of the WTO to enhance the
relevance of competi-tion policy to the multilateral trading
system. In particular, while a number of members expressed
support for the development of a multilateral framework on
competition policy in the WTO, to sup-port the
implementation of effective competition policies by member
countries and reduce the poten-tial for conflicts in this
area, others questioned the desirability of such a framework
and favoured bi-lateral and/or regional approaches to
cooperation in this field.

The question of the
desirability of developing a multilateral framework on
competition policy will now be taken up at the Doha
Ministerial Conference. In the preparations for the
Conference, a number of members have renewed the call for a
WTO framework to support the implementation of effective
national competition policies by members and enhance the
overall contribution of competition policy to the
multilateral trading system while other members have
expressed continuing objections to nego-tiations on this
matter.

Reflecting these divergent views, the draft
ministerial declaration issued on 26 September 2001
con-tains two options for a decision to be taken in Doha on
the nature of the future work on competition policy in the
WTO:

- “We agree to negotiations aimed at enhancing the
contribution of competition policy to interna-tional trade
and development. To this end, the negotiations should
establish a framework to ad-dress the following elements:
core principles, including transparency, non-discrimination
and pro-cedural fairness, and provisions on hardcore
cartels; modalities for voluntary cooperation; and, support
for progressive reinforcement of competition institutions in
developing countries through capacity building. In the
course of negotiations, full account shall be taken of the
situation of de-veloping and least-developed country
participants and appropriate flexibility provided to address
them. We commit ourselves to ensure that appropriate
arrangements are made for the provision of technical
assistance and support for capacity building both during the
negotiations and as an ele-ment of the agreement to be
negotiated.”

or

- “The Working Group on the Interaction
between Trade and Competition Policy shall undertake further
focused analytical work, based on proposals by members. A
report on this work shall be presented to the Fifth Session
of the Ministerial Conference.”

ENDS

TRANSPARENCY IN
GOVERNMENT PROCUREMENT

Applying the fundamental WTO
principle of transparency to how governments buy goods and
services

For the last four-and-a-half years the WTO has
actively pursued a work programme on the subject of
transparency in government procurement. This has been based
on a mandate adopted by ministers at the WTO Singapore
Ministerial Conference held in December 1996 to: “establish
a working group to conduct a study on transparency in
government procurement practices, taking into account
national policies, and, based on this study, to develop
elements for inclusion in an appropriate agreement”.

The
Singapore mandate reflects the heavy emphasis placed
throughout the WTO system of rules and practices on
transparency. Transparency is often referred to as one of
the three fundamental principles of the WTO, the others
being most-favoured-nation and national treatment. The role
of transparency is perhaps of greatest importance in
situations where the extent to which rules of general
application determine trading conditions is limited and the
scope for discretionary decision-making is greatest.
Government procurement is a notable example. The GATT and
now the WTO have for a long time had a plurilateral
Agreement, currently with 26 parties out of the 142 WTO
members, with detailed requirements in respect of
transparency in government procurement. The object of the
transparency provisions in this Agreement is not only to
ensure that adequate information on procurement
opportu-nities is made available and that decisions are
fairly taken, but also to facilitate monitoring of the
commitments made under that Agreement not to discriminate
against suppliers and supplies from other Parties.

The
focus of the multilateral work presently under way on
transparency in government procurement is somewhat
different. First, as indicated, this work is multilateral in
nature and aimed at drawing up an agreement to which all 142
WTO members will be parties. Second, the focus is on
transparency as such, rather than on transparency as a
vehicle for monitoring market access commitments. However,
some members have indicated that they would wish future
negotiations to have a broader mandate that could provide,
in the long term, for the exploration of the scope for
market access on a multilateral basis.

The WTO Working
Group on Transparency in Government Procurement, since its
first meeting in May 1997, has met 13 times. The Working
Group initiated its work by hearing presentations from other
intergovernmental organizations which have international
instruments and activities relevant to transparency in
government procurement, notably the United Nations
Commission for International Trade Law (UNCITRAL) and the
World Bank. It then considered a WTO comparative study of
the transparency-related provisions in existing
international instruments on government procurement
pro-cedures as well as in national practices. This covered
the procedures under the plurilateral WTO Agreement on
Government Procurement, the UNCITRAL Model Law and the World
Bank Guide-lines, as well as available material on national
practices.

The next stage in the work of the Working Group
was the systematic study of 12 issues that were identified
as important in relation to transparency in government
procurement. These are: definition and scope of government
procurement; procurement methods; publication of information
on national legislation and procedures; information on
procurement opportunities, tendering and qualification
procedures; time-periods; transparency of decisions on
qualification; transparency of decisions on contract awards;
domestic review procedures; other matters related to
transparency; maintenance of records of proceedings;
information technology; language; fight against bribery and
corruption; in-formation to be provided to other
governments; WTO dispute settlement procedures; and
technical cooperation and special and differential treatment
for developing countries. Written contributions on national
practices, on issues meriting study and setting out ideas
for action have been presented by many members to the
Working Group. A number of members tabled texts of draft
agreements before the Seattle Ministerial Conference.

In
addition to these subjects, the Working Group — since the
Seattle Ministerial — has also heard experiences of
countries on the application of information technology in
government procurement. members also have reported on
national experiences in respect of regional initiatives and
agreements on government procurement in the context of the
Free Trade Area of the Americas (FTAA) negotia-tions and the
Government Procurement Experts Group of the Asia-Pacific
Economic Cooperation (APEC) as well as a number of regional
trade agreements.

The work of the Working Group has shown
that there seems no disagreement among members about the
importance of transparency in government procurement and of
the desirability of the WTO pur-suing its work in this area.
The differences essentially relate to how this should be
done. In the run-up to the Doha Ministerial, a number of
members argue that after the intensive work during the past
four-and-a-half years, the WTO is now in a position to
negotiate a transparency agreement in the context of a new
round. A number of developing countries, on the other hand,
have expressed concerns about enforcement rules in this
area, including application of the WTO dispute settlement
system, and whether the issue is ripe for the launching of
negotiations.

ENDS

TRADE FACILITATION

Cutting
red tape at the border

The issue of trade facilitation
brings the WTO right to the customs’ gate. Traders from both
develop-ing and developed countries have long pointed to the
vast amount of red tape that still exists in mov-ing goods
across borders. Documentation requirements often lack
transparency and are vastly dupli-cative in many places, a
problem often compounded by a lack of cooperation between
traders and of-ficial agencies. Despite advances in
information technology, automatic data submission is still
not commonplace.

UNCTAD estimates that the average customs
transaction involves 20–30 different parties, 40 docu-ments,
200 data elements (30 of which are repeated at least 30
times) and the re-keying of 60–70% of all data at least
once. With the lowering of tariffs across the globe, the
cost of complying with cus-toms formalities has been
reported to exceed in many instances the cost of duties to
be paid. In the modern business environment of just-in-time
production and delivery, traders need fast and predict-able
release of goods. An APEC study estimated that trade
facilitation programs would generate gains of about 0.26% of
real GDP to APEC, almost double the expected gains from
tariff liberalization, and that the savings in import prices
would be between 1–2% of import prices for developing
countries in the region.

Analysts point out that the
reason why many small and medium size enterprises — who as a
whole account in many economies for up to 60% of GDP
creation — are not active players in international trade,
has more to do with red tape rather than tariff barriers.
The administrative barriers for enter-prises who do not
regularly ship large quantities are often simply too high to
make foreign markets appear attractive.

For
developing-country economies, inefficiencies in areas such
as customs and transport can be road-blocks to the
integration into the global economy and may severely impair
export competitiveness or inflow of foreign direct
investment. This is one of the reasons why
developing-country exporters are increasingly interested in
removing administrative barriers, particularly in other
developing countries, which today account for 40% of their
trade in manufactured goods.

In all countries, trade
facilitation will not only benefit importers and exporters,
but also consumers, who currently face higher prices due to
red tape in their own import administration. Despite many
advances, traders are currently still confronted with severe
obstacles in moving goods across borders, as voiced by the
trading community at the 1998 WTO Trade Facilitation
Symposium, where private-industry representatives gave an
overview of the wide range of problems they encounter in
their daily trade transactions.

While the WTO has been
always been dealing with issues related to the facilitation
of trade and WTO rules comprise a variety of provisions that
aim to enhance transparency and set minimum procedural
standards (such as GATT Articles V, VIII and X or several
provisions in agreements like the ones on import licensing,
TBT, SPS and others), the WTO legal framework sometimes
lacks specific provi-sions, particularly with respect to
customs procedures and documentation and transparency
issues. As a separate topic, trade facilitation is a
relatively new issue for the WTO. It was added to its agenda
less than five years ago, when the Singapore Ministerial
directed the Council for Trade in Goods “to undertake
exploratory and analytical work... on the simplification of
trade procedures in order to as-sess the scope for WTO rules
in this area”.

A lot of such exploratory and analytical
work has been done since, with members engaging very
con-structively in the debate. Delegations agree that
simplifying trade procedures can result in consider-able
savings in time, money and human resources that would
benefit each and every economy. Mem-bers are also in
agreement on the developing countries’ need for substantial
and comprehensive tech-nical assistance to strengthen their
administrative capacities and support their national reform
efforts. The importance of such assistance has recently been
underlined by donors and recipients at a WTO Trade
Facilitation Workshop held in May 2001, calling for the
development of a more cooperative and coordinated approach
in the future.

Many delegations consider trade
facilitation as being ripe for negotiations in the WTO. They
believe that after more than four years of exploring and
analyzing the scope for WTO rules on this issue, it is now
time to move to the next stage and enter the negotiating
phase. A group of members advocating the negotiation of new
binding trade facilitation rules proposed a two track
approach, centered around commitments on border and
border-related procedures to expedite the movement, release
and clear-ance of goods. Such rules are suggested to build
upon existing WTO provisions (in particular GATT Articles V,
VIII and X) and principles such as transparency and due
process, simplification, efficiency and non-discrimination.
The proposal further provides for the development and
implementation of a comprehensive technical assistance
program in parallel to negotiations.

On the other hand,
there are many developing country members, which, while
generally supportive of the objectives of trade
facilitation, do not want to take on new legal commitments
in the WTO at this point in time. They are concerned that
additional rules will exceed their implementation capacities
and expose them to dispute settlement. Several delegations
also voiced scepticism as to whether there is the need for
new binding rules. Some further indicated a preference for
trade facilitation work on the national, bilateral or
regional level.

ENDS

TRADE AND LABOUR
STANDARDS

A difficult issue for many WTO member
governments

There is no issue which inspires more intense
debate among World Trade Organization member gov-ernments
than the issue of trade and core labour standards.

Labour
standards are not subject to any WTO rules or disciplines at
present, and while the issue con-tinues to be a deeply
important one for some developed country governments, it
seems unlikely that the issue will be taken up in any
official way at the Doha Ministerial Conference.

Advocates
for including labour standards on the WTO’s agenda of future
work maintain rights in-cluding the freedom to bargain
collectively, freedom of association, elimination of
discrimination in the workplace and the elimination of
workplace abuse (including forced labour and certain types
of child labour) are matters which should be considered in
the WTO. In the past, member governments have suggested that
a WTO working party be established to examine the link
between trade and core labour standards. Other member
governments have suggested that a working group involving a
num-ber of international organizations be established to
examine the social issues that are affected by
glob-alization.

But developing countries have another
view. Member governments from the developing world believe
attempts to introduce this issue into the WTO represent a
thinly veiled form of protectionism which is designed to
undermine the comparative advantage of lower-wage developing
countries. Officials from these countries say that workplace
conditions will improve through economic growth and
develop-ment, which would be hindered should rich countries
apply trade sanctions to their exports for reasons relating
to labour standards. Application of such sanctions, they
say, would perpetuate poverty and delay developmental
efforts including those aimed at improving conditions in the
workplace.

The issue of trade and labour standards has
been with the WTO since its birth. In April 1994, when trade
ministers gathered in Marrakesh to sign the treaty that
formed the WTO, nearly all ministers ex-pressed a view on
this issue. The Chairman of that conference concluded that
there was no consensus among member governments at the time,
and thus no basis for agreement on the issue. The Marrakesh
agreement itself states in the preamble that “relations in
the field of trade and economic endeavour should be
conducted with a view to raising standards of living (and)
ensuring full employment …”. In addition, Article XX of the
General Agreement on Tariffs and Trade 1994, states that
governments may restrict imports “relating to the products
of prison labour.”

At the first WTO Ministerial Conference
in Singapore in December 1996, the issue was taken up and
addressed in the Ministerial Declaration. Ministers
stated:

“We renew our commitment to the observance of
internationally recognized core labour standards. The
International Labour Organization (ILO) is the competent
body to set and deal with these standards, and we affirm our
support for its work in promoting them. We believe that
economic growth and development fostered by increased trade
and further trade liberalization contribute to the promotion
of these standards. We reject the use of la-bour standards
for protectionist purposes, and agree that the comparative
advantage of countries, particularly low-wage developing
countries, must in no way be put into question. In this
regard, we note that the WTO and ILO secretariats will
continue their existing col-laboration.”

Existing
collaboration between the WTO and ILO secretariats includes
participation by the WTO in meetings of ILO bodies, the
exchange of documentation and informal cooperation between
the two secretariats. Director-General Mike Moore meets
regularly with ILO Director-General Juan Somavia.

At the
3rd Ministerial Meeting in Seattle in December 1999, the
issue of core labour standards was perhaps the most divisive
issue on the agenda. In the run-up to the meeting, both the
United States and the European Union put forward proposals
for addressing the issue of labour standards inside the WTO.
Although, officials from both members said they did not
envision the use of trade sanctions in the context of the
labour standards issue, both proposals were fiercely opposed
by developing country governments.

At the conference
itself, the US, EU and other developed country governments
fought to get the issue addressed in a working group and
succeeded. Debate in that group was intense and there was
strong disagreement among members. On his way to the
conference, Former-US President Bill Clinton, told a Seattle
newspaper that he believed that trade sanctions might one
day be used in retaliation for la-bour-standard violations.
When the story appeared the next day, the impact on the
conference was substantial. Developing-country delegates
hardened their resolve and although there was serious
de-bate on how the issue may be discussed inside an
international framework, consensus on any role for the WTO
on the question of labour standards was not
attained.

Since the Seattle Ministerial Conference,
governments from around the world have turned their
atten-tion to the ILO as the forum for addressing this
question. During the June 2001 meeting of the ILO governing
body, the Working Party on the Social Dimension of
Globalization reached several agree-ments on how it might
proceed with its work. It was agreed informally that the
technical capabilities of the Working Party needed to be
addressed and that issues for further discussion needed to
be de-cided in advance. There was general agreement that
trade liberalization and employment and invest-ment, with
special emphasis on poverty reduction, should be issues
taken up by the Working Party.

There was also general
agreement that a permanent forum for exchange of views
should be estab-lished. High-level meetings could be
arranged on an ad hoc basis. Members agreed generally as
well that the ILO contribution to the international policy
framework on the question of globalization needed to be
enhanced and that a report on the social dimension of
globalization could be written. Views differed on the issues
that such a report may cover.

There was further the idea
that a global commission of eminent personalities could be
formed to ex-amine the social aspects of globalization, but
no agreement was reached on this point, though there was
consensus that it was an idea worth pursuing in the
future.

Among the ideas discussed was that the report on
globalization could be written by this commission and that
the commission could be launched under the aegis of the
United Nations Secretary General Kofi Annan. Additionally,
there was discussion that the commission might be serviced
by a secretar-iat, under ILO organization, that may include
representatives from the secretariats of other interested
organizations. Final decisions on all of these elements will
be taken by the ILO’s governing body which meets in November
2001.

The actions taken in June 2001 follow on from the
ILO’s 1998 adoption of the Declaration on Fun-damental
Principles and Rights at Work and it’s Follow-up. This
declaration states that ILO member governments endorse some
basic principles included in ILO core conventions. (These
conventions are the fundamental workplace rights and
include: freedom of association and recognition of the right
to collective bargaining; elimination of all forms of forced
labour; the effective abolition of child labour and the
elimination of discrimination in hiring and employment
practices.)

ILO members agreed to respect and promote
these core conventions even if they have not ratified all of
them. The ILO issues annual reports in which ILO officials
obtain information from governments which have not ratified
all conventions on any changes that may have taken place in
national laws or regulations which may impact on these
fundamental labour rights.

In 1999, ILO member governments
also agreed to prohibit and eliminate the worst forms of
child la-bour. These practices were defined as all forms of
slavery, child prostitution and pornography, the use of
children to traffic in drugs and work which is likely to
harm the health, safety or morals of children. ILO member
governments said they recognized that child labour is
largely a function of poverty and that the long-term
solution to the elimination of exploitative and harmful
child labour is through sus-tained economic
growth.

ENDS

DISPUTES

The dispute settlement
system

> A more detailed account of the dispute settlement
procedure can be found in “Trading into the Future” (page 38
in the printed version or
http://www.wto.org/english/thewto_e/whatis_e/tif_e/disp0_e.htm)

>
For more information on disputes in general, go to the WTO
website and follow the path … > trade top-ics > dispute
settlement, or go directly to
http://www.wto.org/english/tratop_e/dispu_e/dispu_e.htm

Overview

After more than six years of operation the
dispute settlement system of the WTO continues to be used
extensively by the WTO members. Up until 1 October 2001 some
240 complaints had been brought by members. In some 56 cases
the dispute was resolved by a final Panel or Appellate Body
Report. In quite a number of cases further reports have been
handed down on the implementation of the Panel or Appellate
Body Report and (in five cases) on the level of the
authorized suspension of concessions and other obligations
(so-called retaliation).

It is clear that developed
countries are the biggest users of the system: they file
almost twice as many complaints as developing countries;
two-thirds of these are directed at other developed
countries, while developing countries also direct about
two-thirds of their complaints against developed coun-tries.
The United States and the European Communities are the
biggest users of the system by far: the United States is
complainant in some 70 cases and respondent in 56; the
European Communities is complainant in 55 cases and
respondent in 32. Naturally, these two are also the biggest
users of the appeals system. Research has demonstrated that
if the number of cases in which the United States and the
European Communities are involved is corrected for the
volume of their trade and the number of countries with which
they trade, they are not disproportionate users compared to
other members of the WTO. Of the developing countries Brazil
and India are the heaviest users. They have resorted to the
system and responded to complaints in about the same amount
as Canada (the third ranking developed country user of the
system): between 10 and 20 cases as complainant and
respondent each.

How disputes are resolved

The Dispute
Settlement Understanding (DSU) is the legal text that spells
out the rules and proce-dures for settling disputes in the
WTO. It contains 27 articles, is a legally binding
negotiated agree-ment among all the WTO member governments,
and is the ultimate means of enforcing the WTO’s trade
rules. That makes it the backbone of the multilateral
trading system.

Disputes in the WTO arise when one
government accuses another of violating an agreement or
being in breach of its commitments. Briefly, the dispute
settlement system has three stages, with rules, pro-cedures
and strict timeframes for each stage.

- First:
consultations between the governments involved in the
dispute. They have 60 days to reach a mutually agreed
settlement. If they don’t, the complaining government that
initiated the dispute can move the dispute to the next
stage.

- Second: the legal stage where the case is
examined by an independent panel of three le-gal/technical
experts. The panel has between six to nine months to
complete its examination and to produce a detailed report
with its findings based on written and oral statements by
the govern-ments involved.

If the panel report is
appealed, a standing Appellate Body has between two to three
months to ex-amine the appeal and produce a detailed report
with its findings. The DSB then considers whether to adopt
both the panel and the Appellate Body reports. Normally the
reports are adopted because the rules say they can only be
rejected by consensus.

If the DSB rules that the accused
country is innocent, the case stops there. But if the
accused country is found to have violated an agreement or
commitment, the dispute moves into its final stage.

-
Third: implementation. The government concerned is given a
reasonable period of time to im-plement the DSB’s ruling.
Throughout this reasonable period of time, the DSB monitors
how the government concerned is implementing the ruling, to
ensure full compliance. If at the end of the reasonable
period of time it appears that there is no implementation or
that compliance is contro-versial between the parties to the
dispute, two things can happen: the party that has “lost”
may of-fer (trade) compensation; or, if that is not
acceptable to the party that “won”, the latter may re-quest
authorization to retaliate. In order to determine whether
there has been less than full compli-ance in the first
place, the DSU provides for a special procedure (often
referred to as the “imple-mentation” or “compliance” panel).

“Sequencing” problem: However, on the first occasion when
this special procedure was initiated in late 1998 (in the
“bananas” case), it gave rise to a serious divergence of
interpretations among the members, particularly between two
of the parties to the dispute — the US and the EC. The
is-sue became known as the “sequencing” problem and resulted
from the fact that this procedure is described without
sufficient detail fashion in the DSU text and, in
particular, that a literal reading of the text seems to
provide that an authorization to retaliate should be given
priority over an ap-plication of the procedure for the
special implementation panel.

The review of the Dispute
Settlement Understanding (DSU) 1998–1999

The review of the
Dispute Settlement Understanding was mandated by a
ministerial decision at Mar-rakesh (1994), to be completed
by the end of 1998. Many subjects and possible improvements
to the DSU were discussed during the review process, but
without much result. The period for the review was extended
to the summer of 1999, but again without success. According
to a group of WTO mem-bers, chaired by Japan, it was
important to remedy at least one major problem, commonly
called the “sequencing” problem, and some smaller issues
directly or indirectly linked to it. To this end, they took
the initiative to present a draft amendment to the Third
Ministerial Conference of the WTO at Seattle in December
1999. The Conference ended indecisively as did the official
review of the DSU. In late 2000 and early 2001, a group of
members tried to revive the discussion on the proposed
amendment, but without success. By late September 2001,
informal discussions had started among members on the
possibility of the Doha Ministerial Conference agreeing to
launch negotiations on possible amendments to the DSU.

The
solution to the ‘sequencing’ problem in implementation
(Articles 21 and 22)

The DSU does not spell out clear
procedures for handling a possible disagreement on whether
the ac-cused government has implemented the DSB’s ruling
fully or not. Members now agree in principle that it is
first necessary to determine whether there has been proper
implementation before moving to the questions of
compensation and retaliation. They also agree that the
judgement has to be made within the WTO system and not
unilaterally.

The main difference of opinion appears to
be over the amount of time needed to determine whether the
accused government has implemented correctly, which in turn
depends on the procedures to be followed to reach a
decision.

For example, do the two sides have to try to
settle this new disagreement by consulting each other, and
if so, for how long? Must the DSB meet — and if so, how many
times — to refer the matter to the panel or Appellate Body
for a judgement?

Should the panel make the judgement with
the possibility of an appeal? Or should it only be made by
the Appellate Body if the original matter had been appealed,
or by the panel if it had not?

Must the DSB adopt the
judgement automatically or must there be a consensus to
adopt? How quickly can authority to retaliate be requested?
And if the amount of retaliation is challenged, how long
should the arbitration take?

Transparency and access to
the dispute settlement system

Panel and Appellate Body
reports (and all other WTO documents relating to specific
disputes) are published on the WTO website immediately after
distribution to all member governments. However, panel and
appeals deliberations are confidential, giving rise to
complaints, particularly by non-governmental organizations
(NGOs), that the proceedings of the dispute settlement
system lack trans-parency.

Some governments say the WTO
system is exclusively intergovernmental in nature. In their
view, if an NGO wants to make an argument to a panel it
should convince one of the governments involved in the
dispute to present that argument to the panel. Other
governments hold the view that the credibility of the system
would be enhanced if it were more open and that openness
would have no significant disadvantages.

It should be
noted that the Appellate Body ruled (in the “Shrimp/Turtle”
case) that panels have the right to accept submissions that
they have not requested from sources other than governments
in-volved in the dispute (such as NGOs). It should also be
noted that Article 18.2 of the DSU states:

“… Nothing in
this Understanding shall preclude a party to a dispute from
disclosing statements of its own positions to the public.
Members shall treat as confidential infor-mation submitted
by another member to the panel or the Appellate Body which
that member has designated as confidential. A party to a
dispute shall also, upon request of a member, provide a
non-confidential summary of the information contained in its
written submissions that could be disclosed to the
public.”

Disputes facts and stats

Situation as of 1
October 2001

To date, 239 disputes have been brought to
the WTO, of which:

38 were withdrawn following
consultations;

103 are under consultations;

26 are being
examined by panels;

2 subject of panel reports which have
been appealed;

36 are in implementation stage following
adoption by DSB of panel & appellate reports;

21
implemented;

9 closed without the need for
implementation;

4 authority for panel elapsed.

Number of
disputes involving some of the biggest users of the DSU

Disputes involving as complainant as respondent with
developing countries

The growing importance of electronic commerce in
global trade led the members of the WTO to adopt a
declaration on global electronic commerce on 20 May 1998 at
their second Ministerial Con-ference in Geneva, Switzerland.
The declaration directed the General Council of the WTO to
establish a comprehensive work programme to examine all
trade-related issues arising from electronic com-merce, and
to present a report on the progress of the work programme at
the third Ministerial Confer-ence of the WTO. The
declaration setting up the work programme included the
statement that “mem-bers will continue their current
practice of not imposing customs duties on electronic
transmission”. The work programme was adopted by the WTO
General Council on 25 September 1998.

Under the work
programme, issues related to electronic commerce were
examined by the Council for Trade in Services, the Council
for Trade in Goods, the Council for TRIPS and the Committee
on Trade and Development. During the course of the work
programme a number of background notes on the issues were
produced by the WTO Secretariat and many member governments
submitted docu-ments outlining their own thoughts. A seminar
on “Government Facilitation of E-commerce for De-velopment”
was held 14 June 2001 under the auspices of WTO Committee on
Trade and Develop-ment. Speakers from developing and
developed countries, international organizations and the
private sector addressed issues related to e-commerce and
development. The results of the seminar are avail-able on
the WTO website at
http://www.wto.org/english/tratop_e/devel_e/sem04_e/sem04_e.htm

Each
of the WTO bodies working on e-commerce issues have produced
reports for the General Coun-cil on progress in their work
programme. The following is a summary of the main points
which emerge from these reports and from a dedicated
discussion on e-commerce issues held under the aus-pices of
the General Council on 15 June 2001:

- Three types of
on-line services transactions were identified:

-
Transactions for a service which is completed entirely on
the Internet from selection to purchase and delivery.

-
Transactions involving “distribution services” in which a
product, whether a good or a service, is selected and
purchased on-line but delivered by conventional means.

-
The vast majority of on-line services transactions are
considered services which are covered by the General
Agreement on Trade in Services (GATS).

- WTO member
governments hold the general view that the GATS does not
distinguish be-tween technological means of supplying a
service.

- The general view of member governments is
that the provisions of the GATS apply to the supply of
services through electronic means.

- A difference of
views has emerged with respect to whether certain products
(e.g. software and books) when delivered electronically
should be classified as goods or services. Such products,
until relatively recently, had been delivered through
conventional means whereby they were contained in a physical
carrier and classified and regulated as goods. The question
now arises as to whether such products, when delivered
electronically, should still be treated as goods and
therefore subject to the rules of the GATT or, should they
be classified as services and be subject to the framework of
the GATS. In either case, members of the WTO would need to
take a decision with respect to these products.

-
Questions are raised about how the Telecommunications annex
of the GATS should relate to access to and use of Internet
access services. Many Internet service providers (ISPs) and
services may benefit from the Annex provisions ensuring fair
and reasonable access to the leased circuits they obtain
from pubic telecom operators. But some member governments
wonder if, or to what extent, ISPs themselves should be
obliged by the Annex to offer such access to
others.

Copies of the reports to the General Council by
the Council for Trade in Services, the Council for Trade in
Goods, the Council for TRIPS and the Committee on Trade and
Development are available on the WTO Internet site: Follow
the path … > trade topics > electronic commerce and look for
“work on electronic commerce in the WTO”.

ENDS

MEMBERS AND ACCESSION

Becoming a member of the
WTO

Any state or customs territory having full autonomy in
the conduct of its trade policies is eligible to accede to
the WTO on terms agreed between it and WTO members (Article
XII of the WTO Agree-ment).

The accession process
commences with the submission of a formal written request
for accession pur-suant to Article XII of the WTO Agreement.
This request is considered by the General Council which
establishes a Working Party to examine the accession request
and to submit recommendations to the General Council which
may include a Protocol of Accession. The Working Party is
open to all mem-bers of the WTO.

Established procedures
require the applicant government to present to Working Party
members a memorandum covering all aspects of its trade and
legal regime. This memorandum forms the basis for detailed
fact finding by the Working Party. After examining all
aspects of the existing trade and legal regimes of the
acceding government, the Working Party goes into the
substantive part of the multilat-eral negotiations involved
in accession, i.e. determining the terms and conditions of
entry. These terms and conditions, involving commitments to
observe WTO rules and disciplines upon accession, and
transitional periods if any, are finally incorporated in the
Draft Report of the Working Party and the Protocol of
Accession.

At the same time, the applicant government
engages in bilateral negotiations with interested Working
Party members on concessions and commitments on market
access for goods and services. This bilat-eral process
determines the specific benefits for WTO members in
permitting the applicant to accede to the WTO.

Once both
the Working Party’s Draft Report and Protocol of Accession
and the market-access com-mitments in goods and services are
completed to the satisfaction of members of the Working
Party, the “accession package” is presented to the General
Council or the Ministerial Conference for adop-tion. Once
approved, the applicant is then free to sign the Protocol.
Thirty days after the applicant government notifies the WTO
Secretariat that it has completed its ratification
procedures, the appli-cant government becomes a member of
the WTO.

Questions are often raised as to when a WTO
applicant can accede to the WTO and whether it joins the WTO
as a developing or a developed country. These questions are
an inherent part of each WTO accession negotiation.
Basically, this involves the granting of certain
flexibilities in the implementa-tion of WTO rules and
disciplines — a matter determined in the negotiation
process. While accession processes vary in length and can
take several years to complete, much depends on the speed
with which the applicant government is able to adjust its
trade and legal regime to the requirements of WTO rules and
disciplines.

Because each accession Working Party takes
decisions by consensus, WTO members must be in agreement
that their individual concerns have been met and that all
outstanding issues have been re-solved in the course of
their deliberations.

With 30 governments
still in the queue for membership to the WTO, accession will
remain a major challenge for WTO members in the years ahead.

Applicants

The following 30 governments have requested
to join the WTO and their applications are currently being
considered by WTO accession working parties or, as in the
case of the People’s Republic of China and Chinese Taipei
and Vanuatu pending approval by the Ministerial Conference.
Each of the governments listed below has WTO observer
status.

Algeria

Andorra

Armenia

Azerbaijan

Bahamas

Belarus

Bosnia
Herzegovina

Bhutan

Cambodia

Cape Verde

People’s
Republic of China

Kazakhstan

Lao People’s Democratic
Republic

Lebanon

Former Yugoslav Republic of Macedonia

Nepal

Russian Federation

Samoa

Saudi
Arabia

Seychelles

Sudan

Chinese
Taipei

Tajikistan

Tonga

Ukraine

Uzbekistan

Vanuatu

Vietnam

Yemen

Federal
Republic of Yugoslavia

Membership of the World Trade
Organization

142 governments as of 26 July 2001

Member
Date of membership

Albania 8 September 2000

Angola 1
December 1996

Antigua and Barbuda 1 January
1995

Argentina 1 January 1995

Australia 1 January
1995

Austria 1 January 1995

Bahrain 1 January
1995

Bangladesh 1 January 1995

Barbados 1 January
1995

Belgium 1 January 1995

Belize 1 January
1995

Benin 22 February 1996

Bolivia 13 September
1995

Botswana 31 May 1995

Brazil 1 January 1995

Brunei
Darussalam 1 January 1995

Bulgaria 1 December
1996

Burkina Faso 3 June 1995

Burundi 23 July
1995

Cameroon 13 December 1995

Canada 1 January
1995

Central African Republic 31 May 1995

Chad 19
October 1996

Chile 1 January 1995

Colombia 30 April
1995

Congo 27 March 1997

Costa Rica 1 January
1995

Côte d’Ivoire 1 January 1995

Croatia

Cuba 30
November 2000

20 April 1995

Cyprus 30 July 1995

Czech
Republic 1 January 1995

Democratic Republic of the Congo 1
January 1997

Denmark 1 January 1995

Djibouti 31 May
1995

Dominica 1 January 1995

Dominican Republic 9 March
1995

Ecuador 21 January 1996

Egypt 30 June 1995

El
Salvador 7 May 1995

Estonia 13 November 1999

European
Union 1 January 1995

Fiji 14 January 1996

Finland 1
January 1995

France 1 January 1995

Gabon 1 January
1995

Gambia 23 October 1996

Georgia 14 June
2000

Germany 1 January 1995

Ghana 1 January
1995

Greece 1 January 1995

Grenada 22 February
1996

Guatemala 21 July 1995

Guinea Bissau 31 May
1995

Guinea 25 October 1995

Guyana 1 January
1995

Haiti 30 January 1996

Honduras 1 January
1995

Hong Kong, China 1 January 1995

Hungary 1 January
1995

Iceland 1 January 1995

India 1 January
1995

Indonesia 1January 1995

Ireland 1 January
1995

Israel 21 April 1995

Italy 1 January 1995

Jamaica
9 March 1995

Jordan 11 April 2000

Japan 1 January
1995

Kenya 1 January 1995

Korea 1 January 1995

Kuwait
1 January 1995

Kyrgyz Republic 20 December 1998

Latvia
10 February 1999

Lesotho 31 May 1995

Liechtenstein 1
September 1995

Lithuania

Luxembourg 31 May 2001

1
January 1995

Macao, China 1 January 1995

Madagascar 17
November 1995

Malawi 31 May 1995

Malaysia 1 January
1995

Maldives 31 May 1995

Mali 31 May 1995

Malta 1
January 1995

Mauritania 31 May 1995

Mauritius 1 January
1995

Mexico 1 January 1995

Moldova

Mongolia 26 July
2001

29 January 1997

Morocco 1 January 1995

Mozambique
26 August 1995

Myanmar 1 January 1995

Namibia 1 January
1995

Netherlands

— including Netherlands Antilles 1
January 1995

New Zealand 1 January 1995

Nicaragua 3
September 1995

Niger 13 December 1996

Nigeria 1 January
1995

Norway 1 January 1995

Oman

Pakistan 9 November
2000

1 January 1995

Panama 6 September 1997

Papua New
Guinea 9 June 1996

Paraguay 1 January 1995

Peru 1
January 1995

Philippines 1 January 1995

Poland 1 July
1995

Portugal 1 January 1995

Qatar 13 January
1996

Romania 1 January 1995

Rwanda 22 May 1996

Saint
Kitts and Nevis 21 February 1996

Saint Lucia 1 January
1995

Saint Vincent & the Grenadines 1 January
1995

Senegal 1 January 1995

Sierra Leone 23 July
1995

Singapore 1 January 1995

Slovak Republic 1 January
1995

Slovenia 30 July 1995

Solomon Islands 26 July
1996

South Africa 1 January 1995

Spain 1 January
1995

Sri Lanka 1 January 1995

Suriname 1 January
1995

Swaziland 1 January 1995

Sweden 1 January
1995

Switzerland 1 July 1995

Tanzania 1 January
1995

Thailand 1 January 1995

Togo 31 May 1995

Trinidad
and Tobago 1 March 1995

Tunisia 29 March 1995

Turkey 26
March 1995

Uganda 1 January 1995

United Arab Emirates 10
April 1996

United Kingdom 1 January 1995

United States 1
January 1995

Uruguay 1 January 1995

Venezuela 1 January
1995

Zambia 1 January 1995

Zimbabwe 3 March 1995

ENDS

REGIONAL TRADE AGREEMENTS

Regionalism
and the multilateral trading system

Most WTO members are
now also parties to regional trade agreements (RTAs). These
have expanded vastly in number, scope and coverage and their
number is still growing. It is estimated that more than half
of world trade is now conducted under preferential trade
agreements. RTAs are found in every continent. Among the
best known are the European Union, the European Free Trade
Association (EFTA), the North American Free Trade Agreement
(NAFTA), the Southern Common Market (MERCOSUR), the
Association of Southeast Asian Nations (ASEAN), and the
Common Market of Eastern and Southern Africa (COMESA).

From its inception, the GATT — and now the WTO — has
allowed member countries to conclude customs unions and
free-trade areas, as an exception to the fundamental
principle of non-discrimination set in the
most-favoured-nation clause of Article I. Conditions for
trade in goods were set in GATT Article XXIV. The main
principle is that the purpose of a RTA should be to
facili-tate trade between the constituent countries and not
to raise barriers to the trade of other WTO mem-bers not
parties to the RTA. During the Uruguay Round, Article XXIV
was clarified to some extent and updated by an Understanding
of interpretation. Preferential trade arrangements on goods
between developing-country members are regulated by an
“Enabling clause” dating from 1979. For trade in services,
the conclusion of RTAs is governed by GATS Article V.

Non-reciprocal preferential agreements involving selected
developing and developed countries require WTO members to
seek a waiver from WTO rules. Among the best known examples
of such agree-ments are the US-Caribbean Basin Economic
Recovery Act and the Cotonou Agreement recently signed by
the EC and the ACP countries to replace the Lomé Convention;
the waiver for the latter is still under consideration in
the WTO.

Work within the Committee on Regional Trade
Agreements

During the GATT years, the examination of RTAs
was conducted in individual working parties. In order to
ensure consistency in their examination, the General Council
established in February 1996 a single Committee to oversee
all RTAs, the Committee on Regional Trade Agreements (CRTA).
In addition to examining individual regional agreements,
another important duty of the Committee is to consider the
systemic implications of the RTAs for the multilateral
trading system and the relationship between them. The
Committee is also mandated to develop procedures to
facilitate and improve the examination process and to ensure
that the reporting on the operation of the regional
agreements is adequately carried out by the parties to the
agreements.

To date, over 200 RTAs have been notified to
the GATT/WTO. Of these, 121 agreements notified under GATT
Article XXIV, 19 agreements under the Enabling Clause and 12
under GATS Article V are still into force today. The CRTA
has currently under examination more than 100 agreements.

- Since its establishment, the CRTA has succeeded in
structuring and improving the ex-amination process, in
particular with respect to schedules for examination and the
standardized presentation of basic information concerning
RTAs. In the last three years, the CRTA has endeavoured to
find ways to evaluate each agreement through its assessment
of the consistency of each examined RTA with the
corresponding WTO provisions. These legal yardsticks,
however, are open to different readings by mem-bers and no
consensus on this account has yet been found. Thus, there is
an increasing backlog of reports on the examination of
individual RTAs.

- The expansion and extent of regional
trade agreements make it important to analyze whether the
system of WTO rights and obligations as it relates to
regional trade agreements needs to be further clarified.
There is no common understanding among WTO members on
whether RTAs favour or contradict the development of the
multi-lateral trading system, whether they function as
“building blocks” or “stumbling blocks”. One view is that
RTAs, by moving generally at a faster pace than the
multi-lateral trading system, represent a way of
strengthening it. The positive effect of RTAs on the
integration of developing countries in the world economy is
also empha-sized. Other members consider that, in today’s
circumstances, a redefinition of the relationship between
RTAs and the multilateral trading system is required, to
achieve a better synergy between the two. It is argued that
a further re-interpretation of rules drafted 50 years ago
would not suffice to take into account the fundamental
changes observed in the nature and scope — both geographical
and in coverage — of RTAs and their increasingly overlapping
membership.

What is at stake?

Issues raised by the
regionalism debate are pluri-dimensional and inter-linked.
Some are primarily legal. For example, Article XXIV requires
that “substantially all the trade” between the constituent
members be covered by the RTA, and the same condition is
laid by GATS Article V which requires a “substantial
sectoral coverage” in services. But there is no agreement
among members on the meaning of these wordings, and in fact
many agreements omit from their coverage large and sensitive
areas such as agriculture and textiles. Hence the
difficulties encountered by WTO members in assessing
consistency of RTAs.

Other issues are more institutional
in nature and highlight possible discrepancies between rules
in RTAs and in the WTO system. Trade rules have, over time,
evolved from tariff reduction into regu-latory policy, both
at the regional and at the multilateral level. This is true,
for instance, in such areas as anti-dumping, subsidies, or
standards; the more so since some recent RTAs include
provisions not covered by the WTO such as investment or
competition policies.

Finally and most importantly, there
is the economic dimension. Today, this goes far beyond the
ef-fects of tariff preferences on RTA members and third
parties. Rather, given the large and increasing number of
free trade agreements and their overlapping membership, at
issue is the impact of regional agreements on the shaping
and development of world trade itself. Whatever happens at
Doha, this will be one of the most important challenges that
trade policymakers in all continents will have to face over
the next few years.

At Seattle, some WTO members wanted to
include on the agenda of the WTO Ministerial conference a
review of GATT Article XXIV and GATS Article V. With the
increasing backlog of examination reports not agreed and the
question of the consistency of important RTAs examined
vis-à-vis WTO rules, the relationship between regionalism
and multilateralism has become a critical systemic issue
which is likely to need a political push in the next WTO
Ministerial Conference in Doha.

national treatment The
principle of giving others the same treatment as one’s own
nationals. GATT Article III requires that imports be treated
no less favourably than the same or similar
domesti-cally-produced goods once they have passed customs.
GATS Article XVII and TRIPS Article 3 also deal with
national treatment for services and intellectual property
protection.

TPRB, TPRM The Trade Policy Review Body is
General Council operating under special procedures for
meetings to review trade policies and practices of
individual WTO members under the Trade Policy Review
Mechanism.

transparency Degree to which trade policies and
practices, and the process by which they are estab-lished,
are open and predictable.

Uruguay Round Multilateral trade
negotiations launched at Punta del Este, Uruguay in
September 1986 and concluded in Geneva in December 1993.
Signed by Ministers in Marrakesh, Morocco, in April
1994.

free-rider A casual term used to infer that a
country which does not make any trade concessions, profits,
nonetheless, from tariff cuts and concessions made by other
countries in negotiations un-der the most-favoured-nation
principle.

Harmonized System An international nomenclature
developed by the World Customs Organization, which is
arranged in six digit codes allowing all participating
countries to classify traded goods on a common basis. Beyond
the six digit level, countries are free to introduce
national distinctions for tariffs and many other
purposes.

ITA Information Technology Agreement, or
formally the Ministerial-Declaration on Trade in
Infor-mation Technology Products, under which participants
will remove tariffs on IT products by the year 2000.

ITA
II Negotiations aimed at expanding ITA’s product
coverage.

nuisance tariff Tariff so low that it costs the
government more to collect it than the revenue it
gener-ates.

schedule of concessions List of bound tariff
rates.

tariff binding Commitment not to increase a rate of
duty beyond an agreed level. Once a rate of duty is bound,
it may not be raised without compensating the affected
parties.

tariff escalation Higher import duties on
semi-processed products than on raw materials, and higher
still on finished products. This practice protects domestic
processing industries and discourages the development of
processing activity in the countries where raw materials
originate.

tariffs
Customs duties on merchandise imports. Levied either on an
ad valorem basis (percentage of value) or on a specific
basis (e.g. $7 per 100 kgs.). Tariffs give price advantage
to similar locally-produced goods and raise revenues for the
government.

WCO World Customs Organization, a multilateral
body located in Brussels through which participat-ing
countries seek to simplify and rationalize customs
procedures.

NON-TARIFF MEASURES

anti-dumping duties
Article VI of the GATT 1994 permits the imposition of
anti-dumping duties against dumped goods, equal to the
difference between their export price and their normal
value, if dumping causes injury to producers of competing
products in the importing country.

circumvention Measures
taken by exporters to evade anti-dumping or countervailing
duties.

countervailing measures Action taken by the
importing country, usually in the form of increased duties
to offset subsidies given to producers or exporters in the
exporting country.

dumping Occurs when goods are exported
at a price less than their normal value, generally meaning
they are exported for less than they are sold in the
domestic market or third-country markets, or at less than
production cost.

QRs
Quantitative restrictions — specific limits on the quantity
or value of goods that can be imported (or exported) during
a specific time period.

rules of origin Laws, regulations
and administrative procedures which determine a product’s
country of origin. A decision by a customs authority on
origin can determine whether a shipment falls within a quota
limitation, qualifies for a tariff preference or is affected
by an anti-dumping duty. These rules can vary from country
to country.

safeguard measures Action taken to protect a
specific industry from an unexpected build-up of imports —
governed by Article XIX of the GATT 1994.

subsidy There
are two general types of subsidies: export and domestic. An
export subsidy is a benefit conferred on a firm by the
government that is contingent on exports. A domestic subsidy
is a benefit not directly linked to exports.

tariffication
Procedures relating to the agricultural market-access
provision in which all non-tariff measures are converted
into tariffs.

trade facilitation Removing obstacles to the
movement of goods across borders (e.g. simplification of
customs procedures).

VRA, VER, OMA Voluntary restraint
arrangement, voluntary export restraint, orderly marketing
ar-rangement. Bilateral arrangements whereby an exporting
country (government or industry) agrees to reduce or
restrict exports without the importing country having to
make use of quotas, tariffs or other import
controls.

TEXTILES AND CLOTHING

ATC The WTO Agreement on
Textiles and Clothing which integrates trade in this sector
back to GATT rules within a ten-year period.

carry forward
When an exporting country uses part of the following year’s
quota during the current year.

carry over When an
exporting country utilizes the previous year’s unutilized
quota.

circumvention Avoiding quotas and other
restrictions by altering the country of origin of a
product.

CTG Council for Trade in Goods — oversees WTO
agreements on goods, including the ATC.

integration
programme The phasing out of MFA restrictions in four stages
starting on 1 January 1995 and ending on 1 January
2005.

ITCB International Textiles and Clothing Bureau —
Geneva-based group of some 20 developing country exporters
of textiles and clothing.

MFA Multifibre Arrangement
(1974-94) under which countries whose markets are disrupted
by in-creased imports of textiles and clothing from another
country were able to negotiate quota restric-tions.

swing
When an exporting country transfers part of a quota from one
product to another restrained product.

TMB The Textiles
Monitoring Body, consisting of a chairman plus ten members
acting in a personal capacity, oversees the implementation
of ATC commitments.

transitional safeguard mechanism
Allows members to impose restrictions against individual
ex-porting countries if the importing country can show that
both overall imports of a product and im-ports from the
individual countries are entering the country in such
increased quantities as to cause — or threaten — serious
damage to the relevant domestic
industry.

AGRICULTURE/SPS

Agenda 2000 EC’s financial
reform plans for 2000–06 aimed at strengthening the union
with a view to receiving new members. Includes reform of the
CAP (see below).

border protection Any measure which acts
to restrain imports at point of entry.

BSE Bovine
spongiform encephalopathy, or “mad cow disease”.

box
Category of domestic support. Green box: supports considered
not to distort trade and there-fore permitted with no
limits. Blue box: permitted supports linked to production,
but subject to production limits and therefore minimally
trade-distorting. Amber box: supports considered to distort
trade and therefore subject to reduction
commitments.

Cairns Group Group of agricultural exporting
nations lobbying for agricultural trade liberalization. It
was formed in 1986 in Cairns, Australia just before the
beginning of the Uruguay Round. Current membership:
Argentina, Australia, Bolivia, Brazil, Canada, Chile,
Colombia, Costa Rica, Guate-mala, Indonesia, Malaysia, New
Zealand, Paraguay, Philippines, South Africa, Thailand and
Uru-guay.

CAP Common Agricultural Policy — The EU’s
comprehensive system of production targets and mar-keting
mechanisms designed to manage agricultural trade within the
EU and with the rest of the world.

Codex Alimentarius
FAO/WHO commission that deals with international standards
on food safety.

distortion When prices and production are
higher or lower than levels that would usually exist in a
competitive market.

deficiency payment Paid by governments
to producers of certain commodities and based on the
difference between a target price and the domestic market
price or loan rate, whichever is the less.

EEP Export
enhancement programme — programme of US export subsidies
given generally to com-pete with subsidized agricultural
exports from the EU on certain export markets.

food
security Concept which discourages opening the domestic
market to foreign agricultural prod-ucts on the principle
that a country must be as self-sufficient as possible for
its basic dietary needs.

internal support Encompasses any
measure which acts to maintain producer prices at levels
above those prevailing in international trade; direct
payments to producers, including deficiency pay-ments, and
input and marketing cost reduction measures available only
for agricultural produc-tion.

International Office of
Epizootics Deals with international standards concerning
animal health.

non-trade
concerns Similar to multifunctionality. The preamble of the
Agriculture Agreement specifies food security and
environmental protection as examples. Also cited by members
are ru-ral development and employment, and poverty
alleviation.

peace clause Provision in Article 13 of the
Agriculture Agreement says agricultural subsidies com-mitted
under the agreement cannot be challenged under other WTO
agreements, in particular the Subsidies Agreement and GATT.
Expires at the end of 2003.

reform process/programme The
Uruguay Round Agriculture Agreement starts a reform process.
It sets out a first step, in the process, i.e. a programme
for reducing subsidies and protection and other reforms.
Current negotiations launched under Article 20 are for
continuing the reform proc-ess.

SPS regulations Sanitary
and Phytosanitary regulations — government standards to
protect human, animal and plant life and health, to help
ensure that food is safe for consumption.

Berne Convention
Treaty, administered by WIPO, for the protection of the
rights of authors in their literary and artistic
works.

CBD Convention on Biological Diversity

compulsory
licensing For patents: when the authorities license
companies or individuals other than the patent owner to use
the rights of the patent — to make, use, sell or import a
product under patent (i.e. a patented product or a product
made by a patented process) — without the permission of the
patent owner. Allowed under the TRIPS Agreement provided
certain procedures and con-ditions are fulfilled. See also
government use.

counterfeit Unauthorized representation of
a registered trademark carried on goods identical or similar
to goods for which the trademark is registered, with a view
to deceiving the purchaser into believing that he/she is
buying the original goods.

exhaustion The principle that
once a product has been sold on a market, the intellectual
property owner no longer has any rights over it. (A debate
among WTO member governments is whether this applies to
products put on the market under compulsory licences.)
Countries’ laws vary as to whether the right continues to be
exhausted if the product is imported from one market into
an-other, which affects the owner’s rights over trade in the
protected product. See also parallel
im-ports.

geographical indications Place names (or words
associated with a place) used to identify products (for
example, “Champagne”, “Tequila” or “Roquefort”) which have a
particular quality, reputa-tion or other characteristic
because they come from that place

government use For
patents: when the government itself uses or authorizes other
persons to use the rights over a patented product or
process, for government purposes, without the permission of
the patent owner. See also compulsory
licensing.

intellectual property rights Ownership of
ideas, including literary and artistic works (protected by
copyright), inventions (protected by patents), signs for
distinguishing goods of an enterprise (protected by
trademarks) and other elements of industrial
property.

IPRs Intellectual property rights.

Lisbon
Agreement Treaty, administered by WIPO, for the protection
of geographical indications and their international
registration.

Madrid Agreement Treaty, administered by
WIPO, for the repression of false or deceptive indica-tions
of source on goods.

mailbox Refers to the requirement of
the TRIPS Agreement applying to WTO members which do not yet
provide product patent protection for pharmaceuticals and
for agricultural chemicals. Since 1 January 1995, when the
WTO agreements entered into force, these countries have to
establish a means by which applications of patents for these
products can be filed. (An additional require-ment says they
must also put in place a system for granting “exclusive
marketing rights” for the products whose patent applications
have been filed.)

parallel imports When a product made
legally (i.e. not pirated) abroad is imported without the
per-mission of the intellectual property right-holder (e.g.
the trademark or patent owner). Some coun-tries allow this,
others do not.

ACP
African, Caribbean and Pacific countries. Group of 71
countries with preferential trading relation with the EU
under the former Lomé Treaty now called the Cotonou
Agreement.

Andean Community Bolivia, Colombia, Ecuador,
Peru and Venezuela.

APEC Asia Pacific Economic Cooperation
forum.

ASEAN Association of Southeast Asian Nations. The
seven ASEAN members of the WTO — Brunei, Indonesia,
Malaysia, Myanmar, the Philippines, Singapore and Thailand —
often speak in the WTO as one group on general issues. The
other ASEAN members are Laos and Vietnam.

Caricom The
Caribbean Community and Common Market comprises 15
countries.

CTD The WTO Committee on Trade and
Development

Customs union Members apply a common external
tariff (e.g. the EC).

EC European Communities (official
name of the European Union in the WTO).

EFTA European Free
Trade Association.

free trade area Trade within the group
is duty free but members set own tariffs on imports from
non-members (e.g. NAFTA).

G15 Group of 15 developing
countries acting as the main political organ for the
Non-Aligned Move-ment.

G77 Group of developing countries
set up in 1964 at the end of the first UNCTAD (originally
77, but now more than 130 countries).

G7 Group of seven
leading industrial countries: Canada, France, Germany,
Italy, Japan, United King-dom, United States.

GRULAC
Informal group of Latin-American members of the WTO.

GSP
Generalized System of Preferences — programmes by developed
countries granting preferential tariffs to imports from
developing countries.

HLM WTO High-Level Meeting for LDCs,
held in October 1997 in Geneva.

ITC The International
Trade Centre, originally established by the old GATT and is
now operated jointly by the WTO and the UN, the latter
acting through UNCTAD. Focal point for technical
co-operation on trade promotion of developing
countries.

LDCs Least-developed countries.

MERCOSUR
Argentina, Brazil, Paraguay and Uruguay.

NAFTA North
American Free Trade Agreement of Canada, Mexico and the
US.

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